An increasing proportion of mortgage holders are opting for the security of a fixed rate mortgage, with demand for this type of home loan rising month after month.
According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 22.97% of all loans written in January, up from 22.04% in December and 19.51% in November.
“The last time fixed rate demand was this high was back in May 2016,” Mortgage Choice chief executive officer John Flavell said.
“It would seem the threat of rising interest rates is enough to encourage a growing proportion of Australian mortgage holders to partly or wholly fix their home loan.
“And while it will remain to be seen what the Reserve Bank of Australia does at next week’s Board meeting, it is fair to suggest that future rate increases are now more likely than not. As such, it isn’t surprising to see an increasing proportion of borrowers opting for a fixed rate home loan.”
Looking ahead, Mr Flavell said we could see further increases in fixed rate demand, especially if the Reserve Bank or Australia’s lenders choose to lift rates in the near future.
Across the country, fixed rate demand was strongest in New South Wales, with this type of home loan accounting for 28.07% of all loans written throughout the month of January.
Western Australian and Queensland weren’t far behind, with fixed rates accounting for 27.67% and 24.09% respectively.
Meanwhile, in Victoria the story was a little different. Within the state, fixed rate mortgages accounted for just 13.91% of all loans written throughout January.
Variable rate home loans, specifically ongoing discount products, remained the most popular product with borrowers across the country.
Mr Flavell said regardless of whether borrowers were opting for fixed or variable rate home loans, they can be guaranteed of securing a sharp rate.
“Interest rates are still incredibly low by historical standards, making now a great time to be a borrower or a buyer,” he said.