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Demand for fixed rate mortgages falls

By Tim Neary
20 May 2019 | 9 minute read
SusanMitchell reb

Demand for fixed rate home loans fell in April, new data from Mortgage Choice shows.

According to the company’s latest national home loan approval data, demand for fixed rate home loans fell over the month of April, accounting for 21.41 per cent of all home loans written — a reduction of 1.23 per cent from the month prior.
Mortgage Choice CEO Susan Mitchell said the findings are intuitive.

“While demand for fixed rate home loans hovers around its 12-month average, we could expect to see more borrowers choosing to fix in the coming months as lenders announce reductions to their fixed rate products.
“In their continued effort to lure borrowers, major lenders and smaller lenders on our panel have slashed the interest rates on their fixed rate home loans. ANZ announced a reduction to a range of fixed rate home loan rates last week, which follows recent announcements from CBA, NAB and Westpac as well as other lenders on our panel.”

Ms Mitchell said fixed rates are well below their long-term average.

“Which means borrowers who are seeking repayment certainty on their home loans will have access to a range of competitive deals if they commit to a fixed term.
“That being said, average variable rates are still lower by comparison, and as an official cash rate reduction from the Reserve Bank of Australia is on the cards, variable rates stand to move even lower, cementing variable loan popularity over the long term.”
Ms Mitchell said this makes a compelling case for borrowers who may want to split their home loan into fixed and variable portions.
The data revealed that fixed rate demand was highest in New South Wales, with this type of product accounting for almost 25 per cent of loan applications.
This was followed closely by Queensland, where fixed rate demand accounted for 24 per cent of all home loans.
Borrowers in Western Australia were the least likely to fix their interest rate, with 13 per cent choosing this type of product, followed by Victoria where 16 per cent of borrowers fixed their interest rate.
The most popular home loan products among borrowers were ongoing discount variable rate loans, followed by basic variable rate loans.

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