Jump in demand for fixed-rate mortgages in September as lenders fight to be lowest

The almost constant stream of lenders cutting fixed mortgage rates have struck a chord with borrowers, with AFG recording a big jump in fixed-rate mortgages processed over September. 

Around 16.6% of all new home loans processed by AFG brokers in September were fixed-rate products, compared with 9.4% the month before, and even lower figures for most of 2011. 

The uptick was strongest in New South Wales and Western Australia. 

“In September we have seen very aggressive competition, with lenders cutting their fixed-rate offers. 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,” says Mark Hewitt, general manager of sales and operations at AFG. 

According to mortgage comparison website Ratecity.com.au, 70% of lenders, including St George, Westpac, Greater Building Society, Credit Union Australia and ING, have cut their fixed mortgage rates recently. 

The benchmark average three-year fixed mortgage rate has dropped from 7.43% in January to 6.7% in September, according to Ratecity.com.au research. 

Besides an uptick in fixed rate borrowers, the 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% of first-home buyers is in line with the long-term average, in NSW first-home buyers accounted for 18.9% of the market, in WA 17.4% and in QLD 15.8%. 

First-home buying activity was more subdued in Victoria (13.3%) and South Australia (10%). 

Overall sales volume for September was up 12.8% compared with September 2010, with refinancing comprising 38% of loans processed.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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