Fixed rate demand continues to rise

Demand for fixed rate home loans continues to rise, with new data showing this type of product accounted for almost one in every five loans written in December.


January 13, 2016

Demand for fixed rate home loans continues to rise, with new data showing this type of product accounted for almost one in every five loans written in December.

According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 19.44% of all loans written throughout the month of December – up from 17.39% recorded the month prior.

Mortgage Choice chief executive officer John Flavell said this was the second consecutive month that fixed rate demand had increased.

“This spike in demand for fixed rates comes just months after the majority of Australia's lenders lifted the interest rates across their suite of variable rate home loans,” he said. 

At the end of October, many of Australia's lenders lifted the interest rates on their suite of variable home loan rate products outside of any movements by the Reserve Bank of Australia.

“A lot of mortgage holders are now acutely aware that Australia's banks can and will lift their variable rates as they see fit. As such, it isn't surprising to see an increasing number of Australians opting for the security of a fixed rate home loan,” Mr Flavell said.

“Moving forward, and depending on what the Reserve Bank does with the official cash rate next month, I wouldn't be surprised to see an increasing number of Australians looking to fix part or all of their mortgage.” 

Across the country, demand for fixed rate home loans was highest in New South Wales, with this type of product accounting for 25.35% of all loans written.

South Australia and Queensland weren't far behind, with fixed rate products accounting for 20.25% and 19.13% respectively.

At the other end of the spectrum, fixed rate demand was lowest in Victoria, with this home loan type accounting for 10.65% of all loans written in the month of December.

Overall, fixed rate demand increased in four of the five states. Despite this, variable rate home loans – specifically ongoing discount loans – continued to prove the most popular home loan product amongst borrowers.

For archived copies of the Homeloan Choices bulletin, please refer to /about-us/homeloan-choices-newsletter


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