Fixed rate home loans have hit their highest level as a proportion of mortgages in nearly four years as interest rates fall to absolute levels not seen since the GFC.
ABS data has indicated that fixed rate home loans accounted for 14.52% of all mortgages taken out in March. The result is the highest proportion since May 2008, and represents a 65% increase on last year. The swell in demand comes as RateCity has claimed fixed rates have fallen to their lowest absolute levels in three years.
RateCity spokesperson Michelle Hutchison said lenders considered the loans a more secure investment in light of the government's ban on exit fees. With fixed rate break fees untouched by the regulation, Hutchison said it benefited lenders to lock borrowers into longer terms.
But Hutchison warned that borrowers should think carefully before deciding to lock in a rate.
"If you have any concerns for variable rates falling further, it's worth comparing the top variable home loans before jumping into a fixed home loan. It's not just the absolute level of fixed rates that matter - it's the gap between fixed and variable," she said.
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