Demand for fixed-rate mortgages is increasing with one in four borrowers choosing to fix rates last month.
Fixed rates accounted for 24.19 per cent of all broker-originated home loans written in August – up from 23.82 per cent recorded the month before, according to Mortgage Choice data.
Mortgage Choice spokesperson Jessica Darnbrough said it wasn’t surprising to see demand for fixed rates grow last month given that so many of Australia’s lenders recently trimmed the interest on their suite of fixed rate home loans.
“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,” Ms Darnbrough said.
“Whenever lenders cut their rates, we tend to see a lift in demand for that type of product a few months later,” she said.
“As such, it wasn’t surprising to see fixed rates starting to gain greater traction with borrowers in August. Moving forward, we expect fixed rate demand to climb slightly higher again throughout September, as more borrowers look to take advantage of the historically low fixed rates that Australia’s lenders are currently offering.”
Fixed rates were most popular in Queensland where they accounted for 29.85 per cent of all loans written.
South Australia and New South Wales saw a 25.83 and 25.30 proportion of fixed-rate loans, respectively, last month.
Demand for fixed rates was lowest in Victoria, with this type of product accounting for just 16.70 per cent of all home loans written through August.
Discounted variable rates in Victoria accounted for 83.3 per cent of all home loans written.
The story was much the same in Western Australia, where variable rates accounted for 80.94 per cent of all home loans written.
Ms Darnbrough said all borrowers would have secured an incredibly competitive rate, given that interest rates continue to hover around historical lows.
“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,” she said.