June 20, 2019
Demand for fixed rate home loans rose in May, reveals new data from Mortgage Choice.
According to the Company’s national home loan approval data, demand for fixed rate home loans rose over the month of May, accounting for 22.47% of all home loans written.
Mortgage Choice Chief Executive Officer Susan Mitchell said, “Over the last 12 months, fixed rates have accounted for 21.81% of all loans written. When you consider what has been happening in the market, the increase in demand is hardly surprising.
“Lenders on our panel have been aggressively discounting fixed rate home loan products, which has been effective in enticing more borrowers to commit to a fixed term.
“With rates as low as 3.49% p.a., it’s unsurprising to see an increasing proportion of borrowers choosing to fix.”
The data revealed that fixed rate demand was highest in Queensland, where 26% of borrowers opted for this type of home loan. This was followed by Western Australia, where 25% of borrowers chose to fix the interest rate on their home loan. Borrowers in Victoria were the least likely to fix, with 15% of borrowers choosing this type of product.
The most popular home loan products in May were ongoing discount Variable Rate loans followed by Basic Variable rates.
Ms Mitchell said, “For those borrowers who may be considering fixing part or all of their home loan, now could be a good time to do so. Current fixed-rate loan pricing presents good value by long-term standards.
“This is good news for borrowers seeking repayment certainty. In particular, for first home buyers who are looking to take advantage of government schemes and record low interest rates to enter the property market for the first time.”
“While news of low interest rates is certainly going to pique borrower interest, it’s equally important that borrowers remember the interest rate isn’t the only component of a home loan and they should look for the right loan product and features for their short and long-term needs.
“It pays to be proactive when it comes to your home loan interest rate, as complacency could stop you from potentially saving thousands each year.
“As we approach the end of the financial year, I also encourage existing borrowers to speak to their mortgage broker to get their home loan reviewed.
“I advise borrowers to review their home loan at least once a year to ensure their current loan is still meeting their needs. After all, the number of rate cuts we have seen in the last few weeks alone could mean there are more suitable and more affordable loan products on the market than the one they are currently in.
“Borrowers who are considering switching home loan products should speak to their local mortgage broker to learn what their options are,” concluded Ms Mitchell.