December 01, 2014
An increasing number of borrowers are opting to fix their mortgage, with fixed rates hitting a nine month high in November.
According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 26.98% of all loans written in November – up from 26.64% recorded the month before.
Mortgage Choice spokesperson Jessica Darnbrough said while rates are currently sitting at all time lows, an increasing number of borrowers are looking for some certainty around their repayments.
“A growing number of borrowers are beginning to realise that while rates are low, they can't stay this way forever. And as such, they are looking to fix their mortgage now while rates are sitting at historically low levels,” she said.
“Furthermore, a lot of lenders slashed the interest on their suite of fixed rate products at the end of July and we are finally starting to see the result of those rate movements coming through in our data.”
Across Australia, fixed rates were most popular in New South Wales, with this type of product accounting for more than one third (34.13%) of all loans written last month. Queensland wasn't far behind, with fixed rates accounting for 28.65% of all loans written, while in South Australia, Victoria and Western Australia fixed rates made up 20.23%, 19.77% and 16.94% respectively.
But while the popularity of fixed rates continues to grow month on month, variable rates with an ongoing discount remain the favourite choice for borrowers.
Last month, ongoing discount variable rates accounted for 40.43% of all loans written, up from 37.43% the month before.
“With variable rates so low at the moment, it is no surprise to see the majority of borrowers opting for this type of product,” Ms Darnbrough said.
“That said, fixed rates are also very competitive which is why we are seeing an increasing number of borrowers opting for the safety of a fixed rate product. Of course with interest rates currently sitting at historical lows and Australia's lenders competing aggressively for business, borrowers can be assured of securing a good rate regardless of which product type they opt for.”
For archived copies of the Homeloan Choices bulletin, please refer to Choices Newsletter.