A third of Aussies think RBA will hike rates in 2013

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More than a third of Australians believe rate hikes are in the cards this year, making fixed rates a more attractive proposition.
 
CUA's National Mortgage Survey has found 38% of Australians believe rates will begin to rise again this year, while 37% believe they will decrease and 26% think they will stay the same. CUA general manager of products and marketing Jason Murray said this expectation could lead to more demand for fixed rates.
 
"Fixing could be a wise decision to provide clarity on mortgage repayments," he said.
 
The study comes as both Westpac and St. George made cuts to their fixed rate products. CUA has also launched a 5.30% three-year fixed product, which it says is up to 29bps below the three-year rates on offer from major banks.
 
Murray said signs of life in the domestic and global economy could lead to rising variable rates in the near future.
 
“The official cash rate has reached the same low levels that were seen in the peak of the GFC. However, economists are seeing signs of the global economy picking up, which suggests that rates may not go much lower, so now could be an ideal time to lock in your mortgage rate.”
 
But Citibank's head of marketing, product and strategy for mortgages, Belen Lopez Denis, told Australian Broker the decision to fix is an individual proposition based on the borrower's "risk aversion".
 
"It will go back to what are the needs of that customer. That's where brokers provide a great service. Fixed rates wouldn't fit everyone, and variable rates wouldn't fit everyone. It depends on the customer's actual needs and risk aversion," she said.
 
Lopez Denis said the bank has focused on fixed rates due to the unique opportunity presented by an inverted yield curve, making fixed rates a cheap proposition for banks and borrowers.
 
"We were one of the earliest lenders to see that opportunity and jump into it, and we've been able to grab onto that opportunity with brokers. It's also a matter of transparency. We meet weekly to review fixed rates so we can keep on top of what's happening in the money markets," she said.
 
For those who feel the Reserve Bank may continue its easing cycle, Lopez Denis touted the bank's newly launched six month fixed rate product. 
 
"It's still giving the borrower the flexibility to take advantage of potential variable rate cuts over the next six months. If borrowers are sitting on the fence and are not sure if now is the right time to fix, it gives them the flexibility of banking on a low rate now and taking advantage of future rate cuts," she said.
 
"If they couple that with our 60-day free rate lock it gives extra certainty to the consumer."

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