With the Reserve Bank’s interest rate cutting cycle seemingly coming to an end, borrowers flocked to fixed rate loan products in November causing demand for this loan type to hit its highest level in almost six years.
According to data from Mortgage Choice, fixed rates accounted for 30.56% of all home loans in November, the highest level since March 2008, when 35% of all new home loans were fixed rates. In November last year fixed rates accounted for just 22.37% of all home loans.
Mortgage Choice spokesperson Jessica Darnbrough said with the Australian economy performing very well and further rate cuts in the coming months unlikely, borrowers seem intent on fixing their mortgage repayments while rates are low.
“Borrowers’ appetite for fixed rate loans may have also been spurred on by competitive lender pricing. While we have seen a number of lenders continue to lift the interest on their suite of fixed rate products this month, we can’t deny that fixed rate pricing is still extremely competitive,” said Darnbrough.
“With the home loan market ever changing, it is good to see that borrowers are responding to lender activity and making informed home loan choices.”
Fixed rate demand increased in every state, with Queensland seeing the biggest jump with demand for this loan type surging 5.23% over the month to sit at 37.11%. Borrowers in New South Wales weren’t far behind with a 3.42% rise to 33.85% in demand for this loan type in November.
“Variable rate home loans have also dropped to a long time low, accounting for 69.44% of all home loans written in November."