While the number of borrowers taking out fixed rate mortgages dropped slightly in January, demand for this type of product is still sitting at record highs, according to new home loan approval figures from Mortgage Choice.
The latest research found fixed rates accounted for 27.43% of all loans written throughout the month of January – 5.63% lower than the month before.
While fixed rate demand had fallen slightly over the course of January, this type of product continued to be very popular with borrowers sitting at levels not seen since 2008.
If we look back at the last 10 years, on average, fixed rates accounted for 17.63% of all home loans written. So, the demand we are seeing for this type of product is currently sitting almost 10% higher than the long term average.
Demand for fixed rate products is likely to remain strong, especially as more lenders sharpen their rates in this area.
During January, we saw several lenders cut the interest on their suite of fixed rate products.
Most notably, National Australian Bank trimmed their four year fixed home loan package rate to 5.44% - a 20 year low.
All of Australia’s lenders are competing very aggressively on price within the fixed rate arena, and while this is happening more borrowers will opt to fix their mortgage.
Further, borrowers are increasingly flocking to the safety of fixed rate home loans as it provides them with certainty around their mortgage repayments.
In the current economic environment and with the Reserve Bank keeping its cards close to its chest, it is not surprising to see a large percentage of borrowers opting for the safety of a fixed rate home loan.
Across the country, fixed rate products proved most popular with NSW borrowers, with 33.62% opting for a fixed rate home loan in January.
Queensland was next, with 30.77% of borrowers opting for a fixed rate product, while in Western Australia, Victoria and South Australia, fixed rates accounted for 21.39%, 21.20% and 19.78% respectively.
Overall, variable rate home loans continue to prove the most popular amongst borrowers, accounting for 72.57% of all home loans written in January.
For more information contact Stuart Pullar on 3366 9982, or email us at firstname.lastname@example.org
( image courtesy of www.investopedia.com as at 05/02/2014)