Despite back-to-back cuts by the Reserve Bank, borrowers are still keen on the security of a fixed rate mortgage new data indicates.
Mortgage Choice said that 24% of mortgages written in December were fixed – up from 21% in November. The proportion of fixed rate loans sold through the listed broker have increased for the past seven months and is up 13 percentage points since May.
“Consecutive cash rate cuts in November and December 2011 have not swayed Australian borrowers’ desire for fixed rate loans," a Mortgage Choice spokesperson said. "It is possible borrowers’ need for certainty around their home loan repayments, coupled with the affordability of fixed rate loans are the driving forces behind demand for this loan type."
Mortgage Choice credited the increased uptake of fixed mortgages in December to the fact that these products still have attractive rates.
“During December fixed rates were significantly lower than variable rates, in some cases the difference was one percentage point or more," the spokesperson said. “Our loan data shows fixed rates are now more in demand than they have been in over three and a half years at the expense of variable rates, which have lost popularity among new borrowers."