Interest rate report #10 - 11th February '25

Here is your monthly interest rate report.

This gives you a quick, plain English update on interest rates.

How are interest rates changing?

Mortgage interest rates kept falling over the Christmas break. 

What was different was which rates fell. 

In my last interest rate update, I talked about how the 6-month rate had dropped a lot. But all the other rates were pretty stable. 

Today, it’s the other way around. 

The 1-year and 18-month rates have fallen by 0.24% – 0.29%.

While the 6-month is down less than 0.1%.

How much can I negotiate off my interest rate?

Remember, the bank usually discounts their rate when you take out a mortgage. 

So they might advertise 5.59% for the 2-year rate. 

But, when you borrow the money, they might offer you 5.29%.

It’s hard to see these discounts as a borrower. So, I like to share what we’re seeing at Opes Mortgages.

Last year, banks were doing a lot of discounts.

Those big discounts have gone. The average bank only discounts ~0.1% across most of their rates.  

Rather than secretly discounting, banks are making those lower rates public. 

So don’t feel bad about the smaller discounts. You’re still getting the benefit of the lower rate. 

What are the lowest interest rates in the market?

The lowest 1-year rate I’ve seen a bank recently give is 5.45%. That’s 0.14% lower than what I reported back in December. 

But, the big drops have come to the 2-year and 3-year rates.

Last week, Westpac started offering 4.99% for 3-years. Back in December, the lowest negotiated 3-year rate was 5.49%. 

So that’s a massive 0.5% drop in just 2 months. 

I’m hearing that this rate may not be around forever. So I can’t guarantee that this rate will be around in a few months. 

The lowest 2-year rate also dropped 0.3%. 

Watch out for that 5-year rate, though. I’m seeing more banks increase their 4 and 5-year rates. 

So we’re in an interesting period where some rates are falling while others are going up (a tad).

Which rate should I go for?

Let’s say you’re weighing up whether to go for the 1-year rate at 5.5% … or Westpac’s new 3-year rate.

Is it worth taking the cheaper 3-year rate today? 

Or is it better to take the 1-year rate today, pay a bit more initially, but hope interest rates fall?

It takes a bit of number crunching, so my team released this calculator at the end of last year. 

Based on those numbers, the higher 1-year rate would make sense if – in 12 months – you can get a 2-year rate of 4.74% or lower. 

Most banks will negotiate the 2-year rate down to 5.29% right now. So, the 2-year rate would need to fall 0.55% over the next 12 months.

Do you think that’s realistic? 

If you don’t, take the 4.99% 3-year rate. If you think the 2-year rate will fall that much … perhaps the higher 1-year rate is worth a punt. 

Here’s the calculator so you can run your own numbers.

Is it getting easier or harder to get a mortgage?

There was also a bit of a rebound in the number of mortgage advisers saying banks are more willing to lend. 

A net 33% of mortgage advisers say banks are loosening the purse strings.

What cashback can you get?

No change to cashbacks since last month. Most banks still offer 0.9% - 1% of your loan’s value.

Need help with your mortgage?

Need help with your mortgage? 

Hit reply and let me know your situation. I’ll come right back to you to see if my team can help.

Talk again in the new year,

Pete

P.S. I’m still keen for feedback. What else do you want to know about interest rates? Hit reply and let me know. 

I’ll see if I can get the info you’re after for next month’s report.