Lisa Claes, ING Direct’s executive director distribution, claims a combination of variable and fixed rates could be the smartest option for borrowers in the future.
"Currently the three-year and less fixed rates are below variable rates so it has been a smart choice for borrowers,” she told Australian Broker Online.
“It could also make sense from a cash flow perspective for borrowers to have a mix of fixed and floating rate debt when funding their mortgage.
“This provides some certainty of repayments, while allowing some scope to take advantage of lower rates. Equally it lessens the impact if variable rates increase,” she said.
Only four non-majors have passed on the RBA
’s full rate cut of 25 basis points, while the majors have only cut between 18 and 20 points.
Last week, ING
Direct announced it was cutting 25 basis points from its standard variable rate.
Claes said the RBA
’s decision was not the only influencing factor in cutting rates.
Direct, like other banks, fund their assets from a variety of liabilities, the RBA
cash rate is one input into the cost of funds not the whole picture,” she said.
In answer to why majors weren’t passing on the full rate cut, Ms Claes hinted it could come down to the banks’ balance sheets.
“I can say that the funding mix today is influenced by a variety of factors beyond the RBA
cash rate. The other factors include the structure of a bank’s balance sheet,” she said.