November 01, 2013
Despite the fact that many lenders have recently lifted the interest on one or more of their fixed rate products, borrower demand for this loan type crept slightly higher over the month of October.
According to the national new home loan approval figures from Mortgage Choice, fixed rates accounted for 27.38% of all home loans written in October – slightly higher than the 26.86% recorded the month prior.
Western Australia saw the biggest jump in demand for this type of product – surging 8.77% over the month to sit at 28.06%.
Local Hunter Valley Mortgage Choice franchise owner Robert Walpole said with speculation mounting that the Reserve Bank’s rate cutting cycle may be nearing its end, some borrowers may have been encouraged to fix their mortgage repayments while rates are low.
“While we have seen a number of lenders lift the interest on their suite of fixed rate products this month, the reality is, fixed rate pricing is still incredibly competitive,” Robert said.
“Furthermore, fixed rate pricing is likely to climb higher over the coming months. So, for those borrowers who want certainty around their mortgage repayments and wish to lock themselves into a product with a competitive interest rate, fixed rates are a viable option.”
Fixed rate demand climbed in every state except South Australia and Queensland, where demand fell 4.39% and 4.52% respectively to 19.99% and 31.88%.
“While Queensland recorded a significant drop in demand for fixed rates this month, the fact that this product still accounts for over 30% of all new home loan approvals suggests Queensland borrowers are still feeling relatively uncertain about current economic conditions,” Robert said.
“Of course, the same cannot be said for South Australia, where fixed rate demand hit its lowest level in eight months.”