Trump win means fixed rates to rise soon
Australia’s largest online lender loans.com.au says that fixed mortgage interest rates will soon increase across the board.
This follows rises in key swap rates driven by the election of Donald Trump as president of the United States.
Managing director Marie Mortimer said 3, 4, and 5-year swap rates had been drifting up for six weeks.
It really jumped after Mr Trump’s victory in the expectation that his promised tax cuts and infrastructure spending would drive up prices.
“There is no doubt that global markets were pricing in a rise in rates in the medium-term and that has now been aggravated by expectations of higher inflation if Mr Trump implements his election promises,” Ms Mortimer said.
“These higher rates are now being reflected in the fixed rates that lenders can offer homebuyers with at least six Australian lenders raising their fixed-rates in the last three weeks and many more to follow shortly.”
According to Bloomberg, since mid-September this year, 3-year swap rates have risen from 1.69 percent to 1.99 percent, while 5-year swaps have risen from 1.97 percent to 2.40 percent.
In June, loans.com.au slashed its 3-year fixed rate home loan by 32 basis points to a record low of 3.67 percent (3.88 comparison rate).
However it warns that at the time that it probably represented the bottom of the cycle for fixed rates.
This week, loans.com.au increased its 3-year fixed rate to 3.89 percent, while cutting selected variable rates.
The largest variable rate cuts included its Offset (interest only) loan for homebuyers which was reduced by 19 basis points to 3.87 percent and its Essentials (principal and interest) loan for refinancers which fell by 30 basis points to just 3.79 percent. Other key rate cuts are shown below.
