Demand for fixed rate home loans has risen to its “highest level in more than three years”, according to Mortgage Choice’s latest research.
Mortgage Choice’s national home loan approval data has revealed that fixed rate home loans made up 29.63 per cent of all loans written by their brokers in July 2017, the highest demand for fixed rate home loans since December 2013 (when fixed rate loans accounted for 33 per cent of loans), according to Mortgage Choice CEO John Flavell.
Western Australia had the highest number of fixed rate loans in July, at 35.77 per cent of all home loans written, while NSW followed at a close second, with 33.59 per cent of all loans written.
Queensland saw 28.08 per cent of all mortgages being for fixed rate loans, Mortgage Choice found.
Mr Flavell said that the increasing popularity of fixing rates is not surprising, especially with the changes in the Australian mortgage market and the slew of recent interest rate adjustments.
“Subsequently, borrowers wanting certainty and security over their repayments for a set period of time are increasingly turning to a fixed rate mortgage,” he said.
Mr Flavell added that it remains to be seen whether borrowers will continue their flight to fixed rate home loans or “ride the changes in the market” by going for variable rate products.
Indeed, variable rate home loans are still the most popular product for borrowers, accounting for more than 40 per cent of mortgages written.
However, Mr Flavell said this trend could change.
He concluded: “If we continue to see added complexity in the market—with lenders making changes to their pricing and policy—I would expect to see more borrowers opting for the security of a fixed rate loan.”