One in three borrowers open to fixing loans if cash rate goes down again
A second rate cut by the Reserve Bank of Australia (RBA) could prompt over a third of mortgage holders to fix their interest rates, according to new research.
Data released by Money.com.au suggests that the RBA’s upcoming board meeting next week may influence borrower decisions, with 34% of respondents indicating they would consider switching to a fixed rate loan if another cut is announced.
The survey revealed mixed sentiment among homeowners regarding how many cuts it would take to spur a switch. While 29% said a third rate reduction would push them to lock in a rate, 15% said they would wait for four cuts, and 13% would hold out for at least five. Only 9% said February’s rate cut was enough for them to take action.
The findings come as competition intensifies in the lending market, with the several major lenders recently lowering rates ahead of the RBA’s decision, adding pressure on other lenders.
Mansour Soltani (pictured above), mortgage expert at Money.com.au, said that timing remains critical for borrowers looking at fixed rates. “Borrowers should consider waiting until interest rates are closer to the bottom of the downward cycle before fixing their mortgage,” he said.
“This will likely be when we see a wide selection of rates starting with a ‘four’ for an owner-occupier loan with principal and interest repayments. Fixing too early in the downward cycle could cost you thousands in extra interest and hefty break fees if rates continue to fall and you want to refinance again to a lower rate.”
Fixed rate loans are generally chosen by borrowers who want certainty in their monthly repayments and to guard against further rate increases. With economists forecasting between two and four cuts in 2025, homeowners are weighing whether to secure current rates or hold off in hopes of deeper reductions. Any decisions will likely depend on broader economic indicators, including inflation trends, jobless rates, wage pressures, and consumer demand.
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