Spectre of rate hikes sees more borrowers fix
Fixed rates are gaining in popularity as the chances of an RBA rate hike firm.
New figures from Mortgage Choice show fixed rate home loans accounted for 22.97% of all loans written by the company in January, up from 22.04% in December and 19.51% in November.
Fixed rate demand was strongest in New South Wales, at 28.07%. Victoria had the lowest proportion of fixed rate borrowers, at 13.91%.
Mortgage Choice CEO John Flavell said the last time fixed rate demand reached this level was May 2016.
“It would seem the threat of rising interest rates is enough to encourage a growing proportion of Australian mortgage holders to partly or wholly fix their home loan,” Flavell said.
The Reserve Bank will meet on Tuesday of next week for its first 2017 rate decision, and a growing number of economists believe the RBA’s next move will be upward.
“While it will remain to be seen what the Reserve Bank of Australia does at next week’s Board meeting, it is fair to suggest that future rate increases are now more likely than not. As such, it isn’t surprising to see an increasing proportion of borrowers opting for a fixed rate home loan,” Flavell said.