Home loan interest rates could fall dramatically in 2017.

BORROWERS could soon see home loan interest rates in the “two per cent range”.

Financial expert AMP chief economist Dr Shane Oliver is forecasting a trifecta of cash rate cuts to come, driving variable mortgage rates down to historic lows.

He believes there will be another two cash rate cuts in 2016 — in August and November — and a third in early 2017, taking the cash rate from 1.75 per cent to just one per cent.

AMP chief economist Shane Oliver expects another three cash rate cuts to come in the coming months.Source:News Limited

He said that would make it “very possible” for borrowers to see interest rates drop below three per cent.

“We are already getting to the point where there are deals below four per cent,’’ Dr Oliver said.

“If we get two more rate cuts that will get variable rates down to the low threes and if the cash rate goes to one per cent interest rates could below three per cent.”

The RBA is expected to keep the cash rate on hold at 1.75 per cent today (TUESDAY), despite sluggish inflation figures.

The RBA cut the cash rate last month by 25 basis points and it was the first cut in 12 months.

Financial comparison website Mozo’s spokeswoman Kirsty Lamont also said it’s possible mortgage holders could see interest rates “within the two per cent range in the near future.”

Mozo spokeswoman Kirsty Lamont said borrowers should be hunting for cheaper mortgage deals.Source:News Corp Australia

“There is a strong chance of an interest-rate cut in the coming months, which could take the most competitive home loan rates in the market to below 3.5 per cent,’’ she said.

“If the RBA were to cut rates another two times beyond that, we could see home loan rates starting with a two.”

But Ms Lamont said there remains serious concern that continued rate cuts could aggravate a potential housing bubble in some parts of the country.

Mozo figures shows on a $300,000 30-year home loan the lowest interest rate is 3.59 per cent and on a three-year fixed rate deal the lowest rate is 3.69 per cent.

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