Fixed rate home loan demand highest in three years
Home loan borrowers appear to be betting on upward rate moves.
New data from Mortgage Choice shows fixed rate home loans accounted for 29.63% of all loans written through the brokerage in July. Mortgage Choice chief executive officer John Flavell said fixed rate demand was at its highest since December 2013.
“The surge in popularity for this type of product does not come as much of a surprise when we look at what’s been taking place in the market in recent weeks. A few of Australia’s lenders have lowered the interest rates charged on some of their fixed rate products, with some trimming up to 10 basis points from their four- and five-year rates. As a result, many of the fixed rate home loans now on offer are very competitively priced,” Flavell said.
Flavell said lenders had also introduced a variety of policy and pricing changes in recent weeks.
“Some lenders have significantly increased their interest only pricing across both their investment and owner-occupied products. These changes have helped make the mortgage market more complex than ever before. Subsequently, borrowers wanting certainty and security over their repayments for a set period of time are increasingly turning to a fixed rate mortgage,” he said.
Western Australia saw the highest proportion of fixed rate borrowers at 35.77%, followed by New South Wales at 33.59%.
Flavell predicted that further policy changes by lenders could continue to boost fixed rate demand.