Lower rates offer big opportunities for home loan borrowers
- Falling fixed mortgage rates are offering borrowers with opportunities to take advantage of cheaper loans options
- The drop has been driven by a multitude of factors including the banks attempt to build market share and a decrease in bond yields
- Borrowers should take advantage of current low rates before potential changes emerge from the 2019 Federal Election
Decline in fixed interest rates provdes attractive to investors
With falling fixed mortgage rates, borrowers have the best opportunities to take advantage of cheaper and more efficient ways to pay for their home loans. Despite the weakening property market conditions, banks are offering widespread drops in fixed rates in an attempt to attract new customers in order to increase profit margins and build market share. This rate movement comes as a response to falling bond yields which determine the cost of funding for fixed-rate home loans. In the past 12 months, 10 year bond yields have fallen from 2.85% to 2.1% whilst yields for shorter maturity bonds have declined as well. This financial climate proves attractive to investors who could take advantage of lowered house prices and fixed interest rates in the current market. Furthermore, investors could take advantage of the market before potential changes to negative gearing policies that may arise if labour wins the next Federal election to be held in May 2019.
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