May 02, 2013
The overall demand for fixed interest rate home loans continued to climb in April, reaching five-year highs, according to national home loan approval figures from Mortgage Choice.
The preference for fixed rate loans accounted for 28.04% of all new home loans approved in April, showing an increase in demand for this loan type from 27.58% in March and 18.41% in February. This is the highest level of interest in fixed rate loans since March 2008, when demand reached 34.87%.
From a state based perspective, both New South Wales and Victoria saw an increase in fixed rate appetite. Demand for the more conservative loan type in New South Wales rose by 7.94 percentage points to 32.45%, the highest of any state. At the same time, Victoria saw the proportion of fixed rate loans rise by 1.28 percentage points to 21.24%.
However, fixed rates lost favour across the remaining states; Queensland showed demand dropped by 6.53 percentage points to 30.41%, South Australia fell by 4.95 percentage points to 27.31% and Western Australia dipped by 0.55 of one percentage point to 23.70%.
Mortgage Choice spokesperson, Belinda Williamson said, “With a number of lenders still offering highly competitive fixed rate loans, it is not surprising that borrowers have been taking advantage of the deals available and that the national percentage of fixed rate loan approvals has increased.”
“What came as a surprise was that the majority of states – Queensland, South Australia and Western Australia – saw demand for fixed rate loans fall, albeit slightly. With no obvious economic factors instigating the trend, it may be a sign of growing consumer confidence. Time will tell!”
To help boost confidence levels long-term, borrowers are encouraged to set an annual reminder in May to check that they are on track with their household budget and financial goals.
“Set yourself a ‘Mayday' alarm for this time of year – a reminder to review how your loan repayments are travelling, what you expect to happen to your lifestyle over the coming year and if there is anything further you can do to better your financial situation,” said Ms Williamson.
“Since taking out your loan or last reviewing it, you might have changed jobs, switched to part-time work or extended your family - all of which could change your loan's suitability. Or, there could now be a better loan out there with a cheaper interest rate, lower fees and/or improved features.
“Consult an expert if you are unsure. Professional mortgage brokers exist to help you by doing the legwork when comparing your loan options, which may save you money, and certainly time, over the long-term.
“Making changes now may help you to repay your home loan, invest in another property or achieve another financial goal sooner.”
Note: Mortgage Choice writes one in every 25 new home loans in Australia, equating to approx. $10 billion in approvals per year, hence it provides a clear insight into borrower preferences. The 20 year old mortgage broker has a loan book of over $45 billion.
For archived copies of the Homeloan Choices bulletin, please refer to mortgagechoice.com.au/about-us/home-loan-choices-newsletter-subscription.
For further information or to arrange an interview, please contact:
Mortgage Choice Corporate Affairs
0407 416 124
(02) 9018 8603 / 0412 550 004