Further easing in fixed interest rates

July 15, 2002

Two to five year fixed interest rates eased in the month to July 10, according to the Real Estate Institute Mortgage Interest Rate Survey, released today.

Ten of the sixteen lending institutions lowered three to five year rates by 0.20 to 0.26 per cent, while seven institutions decreased their two year fixed rate by 0.05 to 0.20 per cent. Floating rates continued their upward trend, with five institutions raising their floating rates by 0.24 – 0.25 per cent, to now range between 7.35 and 8.00 per cent, compared to the 7.35 and 7.75 per cent range as at June 10.

Mr Hadley, National President of the Institute said today, “While floating rates continue to firm, the easing of long term fixed rates, particularly by the trading banks, offer good opportunities for those homeowners seeking reasonable longer term loan agreements.”

He said, “The World economy recovered remarkably well from a feared global recession, and as a result the Reserve Bank had begun to tighten it’s monetary policy, but that recovery has been marred by recent events in the USA, for example the Enron and World.com scandals. The Institute believes that lending institutions are now reassessing their analysis of the Official Cash Rate over the next twelve to eighteen months and it is now likely that the Reserve Bank will not raise the Official Cash Rate as steeply or quickly as previously thought, and this is reflected in the current interest rate trends.”

As of July 10, one year fixed rates range between 6.85 and 7.6 per cent, compared with 7.30 and 7.85 per cent to June 10; two year rates range between 7.40 and 7.90 compared to 7.80 and 8.10 per cent last month; three year fixed rates range between 7.0 to 8.20, compared to 7.95 to 8.20, per cent last month; while four and five year rates range between 7.95 to 8.45 per cent, compared to 8.29 to 8.45 per cent last month.

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