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Fixed loans on the rise

Fixed loans on the rise

Fear of rising interest rates is causing an increasing number of borrowers to change their mortgage habits, according to new research.

The proportion of borrowers fixing their home loan through finder.com.au was 36 per cent in October 2014, the highest level in over three years since the cash rate began falling in 2011.

November also experienced a high number of borrowers fixing their loan using the comparison website, with 33 per cent.

In January 2014, 25 per cent of borrowers were fixing through finder.com.au, while only 11 per cent were looking to fix in November 2011.

According to data from the Australian Bureau of Statistics, 8,384 fixed home loans were financed in October 2014, the second-highest number this year.

Michelle Hutchison, spokesperson for finder.com.au, said the rise in popularity for fixed loans could stem from many experts forecasting a rate rise next year.

“Even though some experts have changed their forecasts and are now expecting a rate drop before they start to rise, the majority are still expecting rates to rise next year,” she said.

Ms Hutchison said record-low interest rates could also be a factor, with rates among the lowest levels ever recorded.

“Lenders have continued to cut home loan rates this year because their funding costs have fallen and they have passed on the savings to the borrowers,” she said.

“They also have room to move, as they haven’t passed on all of the cash rate cuts since rates began to fall in November 2011.”

 

Fixed loans on the rise
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