Australian home loan rates drop faster than overseas counterparts

According to the RBA, home loans rates are falling faster in Australia than in most other developed countries.

A report in The Australian Financial Review over the weekend said that the average Australian mortgage fell by 2 percentage points as rates tumbled by 3 percentage points between September and December 2008.

The decline contrasted with the US, where mortgage rates have dropped by an average of 0.15 percentage points against a 5 percentage point rate cut between August 2007 and December 2008.

According to the RBA, the difference between the Australian and US drops reflected the structure of Australia’s mortgage market – where three quarters of home loans are on a variable rate. In the US fixed-rate loans comprise of three quarters of outstanding mortgages.