What's Going to Happen to Interest Rates?

Graeme Salt

Two coffees this week told me what is going to happen to interest rates – and it’s good news for borrowers.


The banks like to catch up with me because I am part of one of Australia’s largest broking groups. This week’s meetings were particularly interesting – and I thought I would share it with clients.


At the first meeting, one of the Big Four banks said explicitly “we are going after market share with fixed rates.” This bank is always ‘there or thereabouts’ with interest rates, but is rarely cutting edge. Now they want to lend more money and get more customers by dropping rates. This can only mean one thing – fixed rates will come down and/or stay low for longer.


There is a clear reason for this – good brokers know which banks are offering borrowers the best deals and will clearly recommend those banks to their clients.


The second coffee confirmed that we are in for a very competitive period. At this meeting, another Big Four Bank explicitly named two other banks (also Big Four) with which they wanted to go head-to-head and the way they would do it was through low interest rates. Here the bank representative advised me on the trick to use to get the best rate. There is a process (called pricing) that brokers can use to get the best deal for clients. At this meeting, the Big Four representative advised me of the tactics to use to ensure the bank gave the best deal it could offer.


So, rates will be low for some time to come. I reckon they have been some of the best value coffees I have ever had.


Graeme Salt is a mortgage broker serving customers Australia-wide.  For a no-obligations consultation, please contact him on 02 9922 5055