A non-major lender says fixed rate home loans are set to make a comeback amid speculation of rising mortgage rates.
According to AFG’s latest mortgage index, fixed rate home loans were at their lowest level for more than three years, making up 11.3% of total home loans processed in the quarter to September.
The same trend is expressed in Mortgage Choice
’s monthly, with the major franchise reporting that fixed rate home loans accounted for just 14.41% of all loans written throughout the month of September – the lowest level for the franchise since August 2011.
However, ME’s general manager, broker Lino Pelaccia told Australian Broker
that he expects fixed rate home loans to have a resurgence following Westpac's decision to increase variable home loan interest rates by 20 basis points last week.
“We’re expecting demand for fixed rates to jump as people seek certainty from the growing speculation around what variable rates will do in the foreseeable future,” he said.
“We’re seeing more borrowers starting to consider locking in at least some their home loans with a fixed rate.
“There are still some very competitive fixed rates being offered by the banks.”
Last week, ME announced a 40 basis point cut to one of its fixed home loan rates, dropping its two-year Flexible Home Loan fixed rate for owner-occupiers to 3.89%.