The demand for fixed home loans has hit an eight month high, as the Reserve Bank hints at a period of stability when it comes to interest rates.
According to national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 26.64% of all loans written in October – up from 25.45% recorded the month before.
Mortgage Choice spokesperson Jessica Darnbrough said with further cuts to the official cash rate in the coming months unlikely, borrowers seem intent on fixing their mortgage while rates are low.
“No doubt borrowers’ appetite for fixed rate loans has also been provoked by the ongoing competition for business among Australia’s lenders who continue to offer sharp pricing, significant mortgage discounts and other borrower incentives,” she said.
“It is pleasing to see that borrowers are taking advantage of the current home loan market by actively responding to lender incentives and making informed home loan choices.”
Overall, fixed rates were particularly popular in Queensland, with this loan type accounting for 31.25% of all loans written in this state in October – 3.51% up on the month prior.
Despite a 1.19% drop in demand month on month, variable rate home loans continue to prove most popular with borrowers overall, accounting for 73.36% of all loans approved in October, according to the Mortgage Choice data.
According to ANZ
’s full year results released last week, the split between variable rate and fixed rate home loans is 78%/22%. According to NAB
’s full year results also released last week, the split is 72%/15%.