Demand for fixed rate products declines

Demand for fixed rate products declines

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Fixed rate loans have suffered a slip in popularity, according to new figures.

The latest Australian Mortgages Monthly Wrap from research house RFi shows that fixed rates accounted for 13.5 per cent of all loans written in October 2012, down from 13.7 per cent in September.

According to the report, borrowers were anticipating further rate cuts, which “created a hesitancy to apply for fixed loans”.

Finance Made Easy’s Tony Bice told Real Estate Business' sister title The Adviser that even though there are attractive rates on offer, borrowers are being influenced by other factors.

“It’s a funny market at the moment,” he said. “Some people are happy to fix in at 5.29 per cent, or thereabouts, because they know that at some stage interest rates are going to go up.

“But by the same token, a lot of economists are predicting that 2013 is going to see a further drop in interest rates, so a lot of clients are holding off.”

Pink Finance’s director, Nicole Cannon, said the confusion and uncertainty around what will happen with rates in the first half of 2013 could account for the decline.

“Towards the end of 2012, I had a lot of people who wanted to fix just a part of their loan, not all of it,” she said.

“People are just waiting it out now to see what’s going to happen in February with the next cash rate decision.”

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