New data shows 1 in 4 home loans are fixed

Demand for fixed rate home loans has hit its highest level in more than 12 months, new data has revealed.

February 05, 2016

Demand for fixed rate home loans has hit its highest level in more than 12 months, new data has revealed.

According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 23.62% of all loans written throughout the month of January – up from 19.44% recorded the month prior.

Mortgage Choice chief executive officer John Flavell said the jump in demand meant almost one in every four home loans written was now fixed.

“Home loan interest rates are incredibly volatile at the moment. Consumers are unsure whether or not Australia's lending institutions are going to raise or cut their home loan interest rates,” he said.

“With that in mind, it is not surprising to see a growing number of borrowers looking for some safety and security around their home loan repayments in the form of a fixed rate mortgage.”

Mr Flavell said the last time demand for fixed rate home loans was this high was back in November 2014 when there was a similar level of complexity and confusion around interest rates.

“Over the coming few months, I wouldn't be surprised to see demand for fixed rates continue to increase slightly.”

Queensland recorded the strongest demand for fixed rate products, with this type of loan accounting for 31.12% of all home loans written throughout January.

New South Wales and Western Australia were next, with fixed rate demand accounting for 24.07% and 23.15% respectively.

At the other end of the spectrum, fixed rate demand was lowest in Victoria and South Australia, with this type of product making up 13.09% and 20.03% of all loans written in each state respectively.

But while demand for fixed rate products across Australia grew over the month of January, variable rate home loans – specifically ongoing discount mortgages – remained most popular with borrowers.

Across Australia, 49.53% of borrowers took out an ongoing discount variable rate home loan – down from 52.07% the month prior.

For archived copies of the Homeloan Choices bulletin, please refer to Choices Newsletter.

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