With interest rates sitting at record lows, and set to stay this way for the short term, an increasing number of borrowers are opting to fix their mortgage, causing demand for this loan type to hit an eight month high.
According to national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 26.64% of all loans written in October – up from 25.45% recorded the month before.
Mortgage Choice spokesperson Jessica Darnbrough said with further cuts to the official cash rate in the coming months unlikely, borrowers seem intent on fixing their mortgage while rates are low.
“No doubt borrowers' appetite for fixed rate loans has also been provoked by the ongoing competition for business among Australia's lenders who continue to offer sharp pricing, significant mortgage discounts and other borrower incentives,” Ms Darnbrough said.
“It is pleasing to see that borrowers are taking advantage of the current home loan market by actively responding to lender incentives and making informed home loan choices.”
Overall, fixed rates were particularly popular in Queensland, with this loan type accounting for 31.25% of all loans written in this state in October – 3.51% up on the month prior.
Despite a 1.19% drop in demand month on month, variable rate home loans continue to prove most popular with borrowers overall, accounting for 73.36% of all loans approved in October.
“Regardless of whether borrowers choose a fixed or variable rate mortgage, they will be sure to secure themselves a sharp deal,” Ms Darnbrough said.
“With record low interest rates and ongoing lender competition, the prospects of getting a great deal on your home loan couldn't be better!”
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