03 Dec Why is fixed rate so low ?
Why are the banks offering borrowers the opportunity to lock in two or three year fixed rate loans at record low rates between 1.8 to 2.2 per cent?
This traces back to March 2020 at the peak of COVID 19, as part of the RBA monetary policy decision to stimulate the economy and stem the rise in unemployment, the RBA provided a “Term Funding Facility “granting the authorised deposit-taking institutions (ADIs) (ie. banks) access to 0.25% funding bond at a fixed rate over three year period, with access to the bond till June 2021.
Our recommendation is to continue monitoring the market until March and April 2021, RBA is now providing access of 0.25% bond to second-tier lenders (ADI’s), and we will see more competition in the market offering fixed rate loans until 30 June 2021.