Fixed Interest Rates May Have Reached Rock Bottom

The Reserve Bank of Australia (RBA) has almost bought all available three-year government bonds, according to the National Bank of Australia.

“We note that at the current rate [of Reserve Bank bond buying]… the RBA will own nearly all April 2024 government bonds by mid-2021.”

The RBA has been buying up Commonwealth Government securities over the past few months. The RBA announced in their November policy update, that they were ramping up their bond-buying program to full-blown quantitative easing (QE).

“The purchases of $100 billion will take place over a period of approximately six months, with weekly purchases of around $5 billion,” the update stated.

“The focus of purchases will be bonds with residual maturity of around 5 to 10 years but may also include bonds outside of this range, depending on market conditions.”

“The Reserve Bank will also continue to purchase government securities as needed, to ensure that the yield on the three-year Australian Government bond remains consistent with the Board’s target and to address any market dislocations in the shorter end of the yield curve.”

The “target” rate RBA is chasing is 0.1% and is the benchmark for the big four bank’s fixed rate mortgage products.

The Effect on Interest Rates

The government bonds were intended to boost the RBA’s prices, and lower their yields, as the bond yields move inversely to their prices. This means, that if they RBA have no more government bonds to buy, it can no longer influence the benchmark yield for the banks’ fixed mortgage products.

Lead economist at Equity Economics, Angela Jackson, said these conditions made significantly lower interest rates unlikely.

“Banks may choose to go slightly lower but I can’t see any significant downward movement,” she said.

Shane Oliver, Head if Investment Strategy for AMP Capital, agreed, adding that “unless the RBA buys more bonds, its hard to see that yield going any lower, and consequently, see 3 year mortgage rates decrease.”

In it’s latest monetary policy update, the National Australia Bank (NAB), noted that once the three-year government bonds are used up, it could signal a rise in interest rates.

“…ending its [RBA] three-year bond buying program is likely to see yields rise across the curve as the market interprets the RBA’s shift as a signal for higher rates in the future.”

    Talk with us today

    I want to enquire about :

      Talk with us today

      I want to enquire about :

      • All
      • First Home Buyers Loan
      • Home Loans
      • Investment Loans
      • Uncategorized

      Can Binging On Uber Eats Affect Your Chances Of Getting A Home Loan?

      Can Binging On Uber Eats Affect Your Chances Of Getting A Home Loan? With the current financial climate, a greater focus and scrutiny from lenders has been put into effect around a customer’s spending habits. Reviewing items such as clothing, holidays, personal care etc. To the point where what you choose to eat for dinner

      Queensland Governments Stamp Duty Home Concessions

      Things to Know about Queensland Governments Stamp Duty Home Concessions! When acquiring a property in Queensland, the Queensland Government provides concession for transfer duty to buyers as long as you meet certain requirements. The first one being that the Home Concession only applies to first $350,000 of the consideration or value of the residence, and

      Why Choose Brisbane Home Loans

      You're In Good Hands

      Brisbane Home Loans is all about good old fashioned personal service without exception.

      We Find The Right Deal For You

      We take the time to listen to your needs and then search the market for the best products that satisfies your needs at the lowest possible cost to you.

      Ongoing Comittment

      We continue to work for you after the deal is finished, ensuring that we asess any new offers that become available which may improve your current deal.

      One Stop Lending

      We give our clients access to Personal Loans, Home Loans, Investment Loans and Commercial Loans.  You always only deal with on person for all your lending services.

      How We Work With Our Clients

      We can meet clients in our office, in their home, their office or the local coffee shop. Our initial interview will helps us understand the clients needs in the short, medium and long term so that we can find the best possible lender for your loan.

      The world of financing continues to be more and more complicated. Our Lenders have experience in finding the right product to meet the specific needs of each of our clients.  During this phase, we identify two to three options that may be suitable.

      Our Lending Specialists will present to you a number of options available outlining  the differences, benefits and downfalls of each option presented. Our preferred option and reasons why, we consider this the best fit for you will be clearly explained.

      Our Lending Specialists work with our clients to have all documentsation signed, submitted to the lending institution and processed through to approval.

      We pride outselves on client service which is why our Lending Specialists establish a reasonable review timeframe where they touch base with our Clients to ensure everything is working as planned.  During this review, the client is made aware of any new financing options in the market.

      Brisbane Home Loans is not about one off loans. We truly care about our clients, which is why we stand by their side beyond the completion of the loan.

      What Does A Mortgage Broker Do

      Listen and Evaluate Your Needs
      Calculate How Much You Can Borrow
      Compare Options Available to You in The Market
      Provide You Expert Advice
      Do All The Leg Work
      Obtain Pre-Approval For You
      Create A Plan For You To Ensure Your Always Getting The Best Deal
      Most Importantly We Provide This at No Cost To You

      Testimonials

      Request a call Back.

      Would you like to speak to one of our financial advisers over the phone? Just submit your details and we’ll be in touch shortly. You can also email us if you would prefer.

        Immediate Response: