Fixed-rate home loan inquiries surge as lenders continue to cut fixed-rates:

Mortgage comparison website recorded a surge in fixed-home loan inquiries in August following lenders reducing their fixed rates.

The website reported that nearly one in five home loan enquiries (18%) in August were fixed-rate inquiries compared to just 5% in July.

“Three-year fixed rates are starting from as low as 5.39% – that’s 23 basis points below the lowest variable home loan rate in the RateCity database (5.62%),” says spokesperson Michelle Hutchison.

“That makes fixed rates look very attractive to those concerned about future interest rate rises,” she says.’s lowest three-year fixed rate offering is 5.39% from ME Bank (which cut fixed rates in September) with its lowest variable offering being 5.62% from UBank for those refinancing.

The surge in fixed-rate inquiries came before the Commonwealth Bank and a number of smaller lenders cut some of their fixed rates, suggesting inquiry levels could rise higher in September.

The Commonwealth Bank cut its fixed rates on September 6 with the biggest reductions made to its four-year fixed rate home loan (down 30 basis points) and five-year fixed (down 40 basis points).

Its three-year fixed rate was cut by 10 basis points to 5.74%

Westpac cut fixed rates in June, with the biggest cut being a 50 basis point reduction to its four-year fixed rate offering – the bank's benchmark three-year fixed rate was cut by just 5 basis points to 5.84%.

Other lenders to cut their fixed rates recently include Greater Building Society, which cut its five-year fixed-rate home loans rate to 5.99%.

Mortgage broker Mortgage Choice recorded a big jump in fixed-home loan applications in August with the product rising from 15% to 20% of all home loans arranged by its loan writers over the month.

Mortgage Choice attributed this improvement to more attractive reduced rate offerings and a penchant for borrowers to be conservative in their choice of home loans.

Australian fixed-rate mortgages revert to a floating rate (variable rate) after the fixed-rate period, meaning potentially higher mortgage repayments given the difference between the average fixed rate and average variable rate.

This makes them different to loans in countries such as the US where the fixed rate is locked for the entire term, explained Vera Chaplin, managing director of structured finance at credit rating agency Standard & Poor’s.

Australian lenders do offer fixed-rate terms as long as 15 years but with very high interest rates.

Westpac’s 12-year fixed-rate home loan carries an interest rate of 8.19% while the Commonwealth Bank offers a 15-year fixed-rate home loan at 7.59%.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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