A jump in fixed rate demand means this type of product now accounts for almost one in every four home loans written.
It was announced a few weeks ago that 15 of Australia’s largest banks will soon be forced to meet new rules that will limit their reliance on short-term wholesale funding.
These new rules could force bank funding costs higher. If this happens, we may see some of Australia’s lenders passing on these higher costs to their customers by way of higher rates. As a result, I wouldn’t be surprised to see an increasing number of borrowers looking to fix their mortgage to avoid any potential rate increases.
Despite the small lift in fixed rate demand across the country, variable rate home loans – specifically ongoing discount products – continued to prove the most popular with borrowers.
Speaking about the results, discount home loans will always prove popular with borrowers as they seek to hunt down a competitive interest rate.
Variable rate loans will no doubt remain the most popular product with borrowers for years to come as it allows them to take advantage of rate reductions when they occur. That said, given that the interest rate market is incredibly volatile, I would expect to see more borrowers looking to lock in at least part of their mortgage.