Speaking of InvestorDaily title sister Mortgage businessDr Oliver said if the price of oil continued to fall, global growth continued to remain flat, expectations of US interest rate hikes continued to be pushed back and expectations of cuts in Australia intensified, then borrowing costs would certainly decrease.

Meanwhile, fixed-rate financing costs are falling along with wholesale lending rates.

“A good indicator of that is the five-year bond yield in Australia and it’s down significantly to 2.25 per cent,” Dr Oliver said.

“Over the last six months we’ve seen quite a sharp decline in bond yields globally and in Australia.

“Last year, that started to push five-year mortgage rates below five percent, and that’s still going on,” he said.

Dr Oliver said the fall in bond yields was due to expectations that inflation would remain low.

“The drop in the price of oil played a big part in that,” he explained.

“The fall in the price of oil has reduced inflation rates and expectations, which in turn has the effect of pushing down expectations of short-term interest rates.”

“In Australia there is still talk of a short-term cut in interest rates.

“All of this has an impact on longer-term borrowing costs. The people who benefit first are the lowest-risk borrowers — which is the federal government — so you’ve seen a sharp decline in bond yields over the past year and especially over the past few months.

“That’s why five-year bond yields have come down,” Dr Oliver said.

Cheaper funding costs led to drastic reductions in fixed-rate mortgage rates last year, a trend that looks set to continue in 2015.