Even though home mortgaging has never been cheaper, all is not calm inside the banking world. Global financial institutions like the IMF and World Bank may soon require local banks to adopt stricter policies, and higher interest rates, for smaller deposits (under 20%). This could usher in a two tiered mortgage system with slightly higher rates for those with lower deposits.
Known as “Basel IV” the international banking push is also being considered by the Australian Government’s Financial Systems Inquiry, led by David Murray former head of CBA. He thinks these new regulations do not take into account the strength of the Australian banks.
Another effect of the low interest rate environment has been to puch consumers away from fixed rate loans. In December 2013, 33.1% of mortgages were fixed rate. Average over the last year was 23.7% and last month, the propprtion of those taking up a fixed rate was only 18%.