One in five property owners choosing fixed-rate loans: Mortgage Choice

More than 20 percent of borrowers are choosing to fix their home loan, new data from a leading mortgage brokers suggests, with the trend likely to go up as lenders continue to lift their interest rates out of cycle with the central bank.

Fixed rate home loans accounted for 22.22 percent of all loans written in February, down slightly from 22.97 percent in January, according to national home loan approval data from Mortgage Choice.

“While fixed rate demand was down slightly in comparison to last month, the fact that over 20 percent of borrowers are choosing to fix their mortgage is still significant,” Mortgage Choice chief executive officer John Flavell said.

“Of course, given that so many lenders have raised their interest rates over the past few weeks, I am not surprised to see one in five borrowers opting for a fixed rate home loan.” 

Flavell said he wouldn’t be surprised to see even more borrowers choosing to fix part or all of their mortgage, as lenders continue to lift their interest rates out of cycle with the Reserve Bank of Australia.

“In recent weeks, the Reserve Bank of Australia’s governor Philip Lowe has made it clear that future rate cuts are now more unlikely than likely. With this in mind, it would appear the only way for rates to go is up,” he said.

“As more lenders start to lift their rates, we may see more borrowers choosing to fix their mortgage in a bid to avoid further rate hikes and provide themselves with some certainty around their regular mortgage repayments.”

 
Fixed rate demand was highest in New South Wales, making up 24.17 percent of all home loans written throughout the month of February by the broker.
 
Queensland followed with fixed rate demand accounting for 23.32 percent of all loans written within the state.
 
Overall however, variable rate home loans – specifically ongoing discount mortgages – still remained the most popular product amongst borrowers.
 
Within Australia, ongoing discount home loans accounted for 44.34 percent of all mortgages written.
 
Flavell said with interest rates continuing to sit at near record lows, borrowers should be able to secure a good deal regardless of whether they choose a fixed or variable rate.
 
“At the end of the day, there is no right or wrong answer when it comes to selecting a home loan product, it all comes down to personal preference,” he said.