Dramatic fixed rate cuts are paying dividends for lenders, with one mortgage broker aggregator group recording a sharp increase in the popularity of these products.
According to the latest AFG Mortgage Index, released today, fixed rate home loans rose sharply in popularity in September, as first home buyers returned strongly to the market, especially in New South Wales and Western Australia.
More than 16 per cent of all new home loans processed in September were fixed rate loans, compared to 9.4 per cent the month before, and even lower figures for most of 2011.
The last time fixed rate loans were so popular was in April 2008 when they comprised 18.4 per cent of the product mix.
AFG Mortgage Index also shows a strong return of first home buyers in New South Wales, Western Australia and to an extent Queensland during September.
While the national figure of 15.7 per cent of first home buyers is in line with the long term average, in NSW first home buyers accounted for 18.9 per cent of the market, in WA 17.4 per cent and in QLD 15.8 per cent.
AFG general manager of sales and operations Mark Hewitt said the combination of more realistic property prices, attractive financing options, and lack of confidence in the share market seems to be coaxing first home buyers and investors back into some markets.