Fixed rate loans remain popular

Fixed rate home loans remain popular with mortgage holders, with more than one in four borrowers opting for this type of product.


June 01, 2017

Fixed rate home loans remain popular with mortgage holders, with more than one in four borrowers opting for this type of product.

According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 26.43% of all loans written in May.

“Demand for fixed rate home loans was largely the same in May as it was in April,” Mortgage Choice chief executive officer John Flavell said.

“But while demand was much the same as last month, it is still significantly higher than long term averages. Over the last 12 months, fixed rate mortgages have accounted for approximately 21.36% of all loans written.

“From the data we can see that fixed rate home loans have been growing in terms of popularity in recent months. Of course when you consider what has been taking place in the market, the recent spike in fixed rate demand can hardly be considered ‘surprising'.

“In the last month alone, we have seen a number of lenders make changes to their interest rates across their suite of products outside of any rate adjustments by the Reserve Bank of Australia.”

Mr Flavell said the spate of interest rate and policy changes by Australia's lenders have made the mortgage market more complicated and confusing than ever before.

“Whilst ever there is a significant degree of complexity and uncertainty in the market, a growing proportion of borrowers will look for interest rate security and safety in the form of a fixed rate mortgage,” he said.

Across the country, fixed rate demand was highest in New South Wales, with this type of product accounting for 31.53% of all loans written.

Queensland wasn't far behind, with fixed rate home loans accounting for 27.71% of all loans written.

Meanwhile, variable rate home loans were most popular in Victoria, where this type of product accounted for 82.84% of all loans written.

Looking forward, Mr Flavell said fixed rate demand should continue to remain strong as lenders tweak their policy and pricing in line with regulator guidelines as well as their appetite for business.


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