Lenders Close to Raising Fixed Rates

With one financial institution raising interest levels on fixed-rate home loans, it has been predicted that other banks will follow suit.

Paul Smith, corporate spokesperson with Loan Market, explained that fixed-rate loans have bottomed out, and funding volatility and an improving Australian economy will foster increases as a result.

"While there remains a downward outlook on variable rates, fixed interest rates are now likely to rise and soon intersect with standard variable rates," Mr Smith said.

"For many homeowners, the window to lock in a fixed rate that's lower than a variable one is closing fast."

This is the beginning of a shift in the real estate finance market, Mr Smith added, as lenders begin to view the economy in a more optimistic fashion, and the Reserve Bank of Australia (RBA) becoming more limited in its movements.

The Loan Market spokesperson added that the RBA still has room to cut the cash rate, as some industries are still seeing economic decline, while others are showing improvement.

We could be seeing variable rates lower than fixed ones, Mr Smith suggested.