Fixed rate home loan demand grows

by Rebecca Pike10 Oct 2018

Demand for fixed rate home loans is surging according to one mortgage group which has seen a 6% rise in borrowers going for a fixed rate in the last month.

The latest home loan approval data from Mortgage Choice shows fixed rate loans accounted for more than 24% of all loans written throughout September.

Across the country, borrowers in Queensland were the most likely to choose a fixed rate mortgage, with 26.47% of borrowers choosing this type of home loan product.

This was followed by New South Wales where 26.24% of borrowers chose to fix.

Victoria has seen the lowest level of fixed rate demand for eight consecutive months, however demand for the product rose to almost 17% in September. This was an increase of almost 4% on the month prior, signalling that a reversal to a long-term trend could be on the horizon.

Chief executive officer of Mortgage Choice, Susan Mitchell, said the shift in borrower demand was largely anticipated given the recent changes in the lending landscape.

She said, “September’s data is unsurprising when you consider the recent rate hikes to variable rate home loan products announced by three of the four major banks. This would no doubt be encouraging more borrowers to fix.

“History has shown that when the majors lift their rates, smaller lenders are quick to offer competitive pricing on their own products in order to attract borrowers in search of a better deal.

“However, we have seen limited market movement due to a combination of factors such as the regulatory environment and increasing wholesale funding costs which would no doubt be affecting smaller lenders.

“Institutions across the country have become more selective about the customers they lend to, vying for borrowers in a healthy financial position. Indeed, lenders are seeking high-quality borrowers who present low risk.

“This highlights the need for borrowers to review their current home loan and financial situation with the help of a qualified mortgage professional and financial adviser to ensure they are best placed to secure a competitive deal when they choose to switch loan providers.”