Fixed rate demand hovers near record highs
More than one in four borrowers are choosing to lock in their rate.
New figures from Mortgage Choice show fixed rate home loans accounted for 28.23% of all mortgages written by the broker in October. The figure was little changed from last month, when fixed rates accounted for 28.33% of home loans.
“Over the past four months, fixed rate demand has consistently sat above 28%. The last time we saw this level of consistent fixed rate demand was back in early 2013,” Mortgage Choice chief executive John Flavell said.
Flavell said borrowers were choosing to fix their home loan as forecasts of a Reserve Bank rate rise firms. He predicted the official cash rate could rise “in the not too distant future”.
“Indeed, market conversations around home loan interest rates have changed from ‘if rates rise’, to ‘when rates rise’. Borrowers are acutely aware that a rise in the official cash rate is now largely inevitable, and subsequently are increasingly opting for certainty and security around their mortgage payments,” Flavell said.
Flavell argued that competition in the fixed rate space was also encouraging more borrowers to consider locking in a rate.
“We continue to see Australia’s lenders adjust the interest rates on their fixed rate products for both investors and owner-occupiers. Some have slashed the interest rates on their fixed rate products by as much as 20 basis points in recent weeks. This would no doubt influence some borrowers’ home loan product decisions.”