1 in 5 borrowers opt for fixed mortgages

Despite a small drop in demand, fixed rate mortgages still accounted for more than one in every five home loans written by Mortgage Choice throughout March.

April 10, 2018

According to the company’s latest national home loan approval data, fixed rate home loans accounted for 21.35% of all loans written in March – down 0.4% from the previous month.

“We did see a slight decrease in fixed rate demand during March, but they still remain a popular option, with more than one in five Australians opting for this type of product,” Mortgage Choice spokesperson Jacqueline Dearle said.

“On the other hand, we have been seeing a steady increase in the proportion of borrowers choosing a variable rate home loan every month, with this product making up 78.65% of loans written by our business – up from 78.25% last month.

“This rise can be attributed to the fact that a number of Australia’s lenders are currently offering some competitive interest rates on their variable investment and owner-occupied home loan products.”

“In addition, with the Reserve Bank of Australia leaving the official cash rate on hold at 1.5% for another month, borrowers may not feel the impetus to fix their mortgages.”

Across the country, fixed rate demand was the highest in New South Wales and Queensland, with 25.69% and 24.29% of borrowers opting for this sort of mortgage respectively.

For the fourth consecutive month, Victoria had the lowest demand for fixed rate mortgages, with this type of product accounting for 12.77% of all home loans written.

Looking ahead, Ms Dearle said a number of factors could influence the level of demand for fixed and variable rate home loans.

“We know lenders are hungry for business from investors and owner-occupiers, and already we have seen them adjusting their interest rates on both their variable and fixed rate products,” she said.

“In addition, while the cash rate has remained on hold, there is growing speculation that we could see a rise later in the year.

“For those looking for certainty and security around their monthly mortgage repayments, a fixed rate product may be the best for their needs.

“That said, interest rates remain at historically low levels, which is good news to anyone looking to buy their first property or refinance their mortgage.

“Now is a good time to speak to your local Mortgage Choice broker who can ensure you have the best mortgage with the most competitive interest rate.”

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