Interest rate report #9 - 10th December '24

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 dropped a lot in October. But they didn’t change much in November.

Only the 6-month rate got a big cut. The average bank currently offers 5.99% for 6 months after you negotiate.

That’s down 0.4% compared to last month.

The only other decent drop was for the 2-year rate. That’s down 0.12% compared to October.

Don’t get me wrong. These are still big drops. But rates aren’t falling as fast as they did in the prior month

Interestingly, the average bank increased its 4-year and 5-year rate in November.

This cements my view that the longer-term rates won’t drop much over the next year. I reckon that only the shorter-term rates will see any real cuts.

How much can I negotiate off my interest rate?

Remember, the bank will usually discount 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 5.49%.

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

Banks were discounting some rates over 0.4% a few months ago. Huge!

Today, apart from the 6-month rate, most rates are discounted by only 0.05%.

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 is the same as last month. It’s still at 5.59%.

This rate is still substantially lower (0.5%) than just 2 months ago.

The only exception (again) is the 6-month rate. The lowest negotiated rate in the market fell 0.3% in November. It’s gone from 6.29% to 5.99%

My usual disclaimer – these are the lowest rates negotiated across all banks. So, these DO NOT all come from the same bank.

For example, only 2 banks will currently take the 1-year rate down to 5.59%.

So don’t look at this table and think: “These are the exact interest rates I’ll be offered.”

These rates are an absolute best-case scenario.

Is it getting easier or harder to get a mortgage?

A net 17% of mortgage brokers say the banks are more willing to lend than the previous month.

This reading has fallen over the last few months.

Sure, more mortgage brokers say it’s getting easier to borrow. But a few more say it’s getting a little tougher. At least compared to last month.

One of the reasons for this is that banks are busy.

Lots of people are looking for lending. So the teams in the bank are doing it tough in the lead-up to Christmas.

In a tough market, some mortgage brokers will submit borderline mortgage applications. This clogs up the queue for everyone.

That’s why the median bank takes 9 days to turn around a mortgage application through a broker.