Popularity of fixed rates declines further

by Caroline Dann10 Jul 2012

The popularity of fixed rate loans has taken a dive since the RBA announced an unchanged July rate, according to Loan Market’s research.

The brokerage claims enquiries over fixed rate loans have dropped by 15% in the past week. It was as high as 30% in the lead-up to RBA’s announcement.
The current lowest fixed rate, claimed Loan Market, was around 5.79%.
A company spokesperson said consumers were expecting rates would fall again, mirroring sentiment felt by many in the industry.
“The feedback from consumers shunning fixed rates is that they’re convinced home loan rates have further to drop and that they’re anticipating a period of prolonged low interest rates,” said Loan Market’s Paul Smith.
Again, the ongoing European situation was cited as a key factor for potential cuts from August onwards.
Smith did warn borrowers should consider other factors, such as “certainty of repayment and peace of mind” before discounting fixed rates altogether.