In the last 2 weeks all major banks cut their fixed rates on standard lending products quite significantly (some by up to 0.6%!). This means the fixed rates on average are now lower than the discounted variable rates. Variable rates move up or down dependant on the RBA’s official cash rate.

What does this mean for us Tom and Jane buyers and investors?

Whilst variable rates are generally the most favourably utilised amongst borrowers, this is certainly a possible opportunity for those of you who wish to have some certainty on your repayments. There are a number of ways you can structure your loans and I do advocate fixed term options for the risk adverse investor.

For others, this could be a sign that the cash rate is expected to drop over the coming 3-18 months – which means the variable rate will drop alongside.

Regardless of your school of thought, I believe the RBA will wait until they witness some clarity in the local market and form an opinion on our own inflation expectations.