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.”
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.
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.
Being Our First Home It Was Great Having The Knowledge of Daniel & The team at Brisbane Home
We have been working with Daniel and the team at Brisbane Home Loans for the purchase of our first home, being first home buyers it has been great having the knowledge of Daniel & the team at Brisbane Home Loans to support us. We can’t thank them enough for their support and making themselves available to answer all of our questions. I’d highly recommend Brisbane Home Loans.
We Saved More Than 1% On Our Existing Home Loans
We didn’t realize how important it was to review our home load until we engaged with Daniel and Jordan at Brisbane Home Loans. They helped in submitting our application which resulted in a saving of over 1% in interest on our loans, plus a reduction in our on going bank fees. I would recommend this business and thank Daniel and Jordan for making the process so easy.
Sam and Nicky
It was Our First Home and We had No Idea. Thanks to The Team From Brisbane Home Loans
Daniel and the team at Brisbane Home Loans were super helpful and friendly to me as it was my first home loan and I had no idea! They answered all my questions and were very hardworking. Would definitely recommend to a friend.
They Made Buying Our First Home Easy and Fun. Thanks
The team at Brisbane Home loans have been super helpful and extremely professional to assist us with all our first home questions.
will be recommending them to everyone I know looking to buy!
Thanks for Helping me Turn my Dream into a Reality
Service was great, very informative and kept me up to date on all progress and all steps. Follow up after it was all done and dusted was also great. Took the stress out of it which was a great help for my busy life. I would totally recommend Dan and Jordan to anyone.
Thanks for helping me get my dream into a reality.
Car Loan Approved In Less Than 3 Hours – So Wrapped
I could not believe how quickly Jordan was able to organise my car loan. He was so helpfull and I am truly greatfull.