PHOTO: The banks want to lock you in as a customer now for as long as they can.(ABC News: Grant Wignall)

Interest rates in Australia have plumbed new depths since the Reserve Bank‘s monetary policy announcement on Melbourne Cup Day,

It’s taken several weeks, but following a number of extraordinary policy measures by the RBA (including a formal adoption of Quantitative Easing), at least one bank has taken the decision to offer a three-year fixed home loan rate of 1.89 per cent.

That’s low. In fact, according to interest rate comparison site, Mozo, it’s the lowest commercial fixed interest rate (with an 80 per cent Loan to Value Ratio or LVR) the country has ever seen.

Fixed rates are dropping to all-time lows because the banks are desperate for your money. So far the evidence shows they’re getting it.

The ANZ bank reports borrowers “flocking” to take out a fixed rate loan.

But who really benefits from ultra-low fixed loan rates? The answer lies in finding a solution to the one big unresolved problem COVID-19 has produced: on-going uncertainty for business.

Lowest fixed rates in history

This year has seen many aspects of business and finance turn upside down.

And this year, not only have fixed rates fallen below variable rates, but the interest rate gap between them has never been wider, according to the ANZ.

The cash rate target is nearly at 0 per cent.

Based on the ANZ Bank’s estimates, the average three-year fixed rate has nearly halved over the past two years, from 4.1 per cent in late 2018 to around 2.1 per cent currently.