Fixed rate demand grows as lenders drop rates: Mortgage Choice

With an increasing number of lenders dropping their interest rates, Mortgage Choice recorded demand for fixed rates grew over August and now accounts for almost 25% of mortgages written.

The Mortgage Choice Homeloan Choices data saw 24.19% of loans written being for fixed rates, up from 23.82% the previous month.

“At the end of July, many of Australia’s lenders slashed the interest off their suite of fixed rate products – most notably their five year home loans,” said Mortgage Choice spokesperson Jessica Darnbrough.

“Whenever lenders cut their rates, we tend to see a lift in demand for that type of product a few months later,” she said.

Darnbrough noted that it was unsurprising that fixed rate traction grew through August and with many lenders offering historically low fixed rates, expects the trend to continue through September.

Queenslanders were the most likely to opt for fixed rates, at 29.85%, while they were also popular with South Australia and New South Wales borrowers, at 25.83% and 25.30% respectively.

Victoria’s demand for fixed rates was the lowest in the country, at 16.70%, with borrowers preferring variable rates. Western Australia also recorded strong interest in variable rates,at 80.94%.

“Not only are rates low, but Australia’s lenders have proven they are hungry for business and they are willing to cut the interest on their suite of products, offer significant discounts or other incentives in order to win business,” said Darnbrough.