Borrowers are shying away from fixing their mortgages for the first time in eight months.
New Mortgage Choice data shows that fixed rate demand fell in January following successive RBA rate cuts. After tracking toward making up a quarter of the mortgage market, fixed rates eased off to 21% of the company's approvals.
Inverted yield curves had seen fixed rates fall well below variable rates, but the trend may not last. Company spokesperson Belinda Williamson predicted fixed rate popularity could fall even further should the Reserve cut rates next week.
"If the Reserve Bank decides to cut the cash rate further during its meeting on Tuesday and lenders pass on all or part of the savings, some variable rates could very well fall below fixed rates. If this occurs, next month’s loan approval data may show a bigger shift towards variable rate loans," she said.
Ongoing discount loans kept their position as the most popular mortgage product, hitting an all-time high of 46%. Previously popular standard variable rate loans continued to languish, falling from 15.57% of approvals in December to just over 15%.
Fixed rate frenzy easing off
Consumer mortgage demand has 'flipped'
Fixing popular, but ongoing discounts king