fixed interest rate

PHOTO: The low rate will provide home buyers – and homeowners coming off fixed rates – with a little extra cash. Photo credit: Getty

Just as homeowners thought that interest rates just below 3 percent were a good deal, the bar has just moved even lower.

Following ANZ chopping the rate on one-year fixed loans to 2.79 percent – a move that was quickly matched by Westpac – ASB Bank has announced an even lower fixed rate of 2.69 percent for two years. The rate applies to new home loans, and existing home loans rolling off higher fixed interest rates.

Calling the interest rate of 2.69 percent “unbelievably good”, Mike Pero, founder of Mike Pero mortgages, said that with lockdown over and more buyers entering the market, demand for homes, particularly those under $1 million, is likely to ramp up.

Entire street

Entire street attracts buyers

“The competition’s heating up: banks are looking for customers, traditionally, first-home buyers borrow the largest hunk of money off the bank and if job security is there, in some cases, they could borrow up to 90 percent,” Pero said.

The combination of removing the LVR restriction, record-low interest rates and talk that house prices could fall by up to 15 percent is likely to increase competition, particularly among first-home buyers.

“Job security and interest rates are the two motivators: if you’ve got the job security and there’s two of you working (or one earning good money), I’d be thinking now is a good time to buy,” Pero added.