The Banks Look To Free Float Interest Rates
What is clearly emerging is that Australia’s major banks are set to disconnect and free float their interest rates away from changes made by the Reserve Bank to official interest rates. The ANZ Bank has already done so.
Pointing to the mess in Europe the major banks are looking very hard had at reviewing their rates possibly on a monthly basis, regardless of the Reserve Bank.
This may well present a new challenge in marketing property to an already nervy market. It brings the expectation that a predicted 1% fall in rates during 2012 will not all or even in part flow to the wider market.
The prospect of uniform monthly movements in home loan rates will I think have the potential to worry some parts of residential property the market. How does anyone looking at an apartment purchase off-the-plan manage their finances?
Now the average variable rates sits between 6.4% and 6.7%, while some fixed 3 year terms are just below 6%. If the banks move to set rates as predicted the questions to ask is will fixed term loans become the normal, reversing the current position where a majority of borrowers opt for variable rates? A possible marketing challenge to remain aware of and so let’s see how the next few months ride on this one.