Fixed rate demand falls

April 23, 2019

Demand for fixed rate home loans fell in March, reveals new data from Mortgage Choice.
 
According to the Company’s latest national home loan approval data, demand for fixed rate home loans fell over the month of March, accounting for 21% of all home loans written – a reduction of 1.38% from the month prior.
 
Mortgage Choice Chief Executive Officer Susan Mitchell said it is unsurprising to see borrowers taking a tentative approach towards fixing their interest rate.
 
“There is a great deal of uncertainty surrounding the housing market at present, which could be weighing against borrowers’ decisions to commit to a fixed term. The outcome of the upcoming Federal election carries potential policy implications that could affect people’s willingness to buy. There is also increasing speculation that the RBA will cut the official cash rate in the short-term.
 
“That being said, lenders would be acutely aware of borrowers’ reluctance to fix, and have in the last few weeks responded by cutting rates on some of their fixed rate products.
 
“Those looking to fix could enjoy great rates right now. Major lenders and smaller lenders alike are attempting to lure borrowers to their fixed rate products by announcing reductions of up to as much as 55 basis points," said Ms Mitchell. 
 
Across the country, fixed rate demand was highest in New South Wales, with this type of product accounting for almost 26% of all home loans written throughout the month of March.
 
This was followed closely by Queensland, where fixed rate demand accounted for 24% of all home loans.
 
Borrowers in Victoria were the least likely to fix their interest rate, with 14% choosing this type of product in March.
 
The most popular home loan product among borrowers was ongoing discount variable rate loans, followed by basic variable rate loans.
 
“The home loan market is fiercely competitive at the moment and lenders are actively trying to entice high quality borrowers with attractive interest rates,” advised Ms Mitchell. 
 
“Regardless of what happens to interest rates in the near future, it’s important that borrowers make a decision that meets their immediate and long term needs. My advice to borrowers who want to hedge out the risk of interest rate changes, would be to speak to their local mortgage broker to learn if fixing all or part of their home loan is the right decision for them,” concluded Ms Mitchell.