Borrowers flock to fixed rate loans

Staff Reporter

Consumer demand for fixed rate home loans has increased significantly in the last few months, suggesting home buyers are wary about the future of interest rates.

According to new data from Mortgage Choice, fixed rate home loans made up 13.3 per cent of all approvals last month.

However, results across the states varied more widely than the month prior. NSW and QLD experienced an uptick in fixed term loan approvals, while SA, WA and VIC saw falls.

Ongoing discount home loans, where the interest rate is discounted over the entire loan term usually in return for an annual fee, were the greatest success story amongst new mortgagors. Increased popularity in each state saw the national take-up rate reach an unprecedented 39 per cent.

Company spokesperson Kristy Sheppard said “consumer conservatism” had contributed greatly to the uptick in fixed rate demand.

“Lenders continuing to reduce their fixed rates, to the point where they are often lower than the basic or discounted variable rate is a key influence on the rise in demand for this home loan type. So too is consumer conservatism,” she said.

“However, some states are starting to show a turn in sentiment away from this less flexible loan type that provides budgeting peace of mind.

“At the same time, all states are increasing their focus on discounted rate home loans. This is unsurprising given the array of deals on the table as lenders vie for greater market share.

“Upcoming borrowers will be adding up the value they place on guaranteed steady minimum repayments against the chance of a longer stretch of steady interest rates.”

Staff Reporter

Consumer demand for fixed rate home loans has increased significantly in the last few months, suggesting home buyers are wary about the future of interest rates.

According to new data from Mortgage Choice, fixed rate home loans made up 13.3 per cent of all approvals last month.

However, results across the states varied more widely than the month prior. NSW and QLD experienced an uptick in fixed term loan approvals, while SA, WA and VIC saw falls.

Ongoing discount home loans, where the interest rate is discounted over the entire loan term usually in return for an annual fee, were the greatest success story amongst new mortgagors. Increased popularity in each state saw the national take-up rate reach an unprecedented 39 per cent.

Company spokesperson Kristy Sheppard said “consumer conservatism” had contributed greatly to the uptick in fixed rate demand.

“Lenders continuing to reduce their fixed rates, to the point where they are often lower than the basic or discounted variable rate is a key influence on the rise in demand for this home loan type. So too is consumer conservatism,” she said.

“However, some states are starting to show a turn in sentiment away from this less flexible loan type that provides budgeting peace of mind.

“At the same time, all states are increasing their focus on discounted rate home loans. This is unsurprising given the array of deals on the table as lenders vie for greater market share.

“Upcoming borrowers will be adding up the value they place on guaranteed steady minimum repayments against the chance of a longer stretch of steady interest rates.”

promoted stories

REB Events