Demand for fixed rate loans is on the rise according to new home loan approval data at Mortgage Choice.
Looking at the figures from October, fixed rate loans accounted for more than 24% of all loans written, 3% above the 12 month average.
Across the country, borrowers in New South Wales were the most likely to fix their interest rate, with almost 30% opting for a fixed rate home loan, which was a rise of almost 4% on the month prior.
This was followed by South Australia, where over 27% of borrowers chose to fix and Queensland, where over 23% of borrowers fixed the interest rate on their home loan.
Victorians were the least likely to fix the interest rate on their home loans, with 15.63% opting to fix.
A rise in lenders’ wholesale funding costs and a heavily scrutinised banking sector have contributed to out of cycle rate hikes on home loan products and created a complex lending environment.
CEO at Mortgage Choice, Susan Mitchell, said the demand for fixed rate loans could continue over the medium term.
She said, “Rising variable interest rates would be worrying borrowers across the country who now seem to be making the switch to a fixed rate loan.
“These borrowers, who may be concerned about rising interest rates would be looking to secure repayment certainty in what seems like an uncertain period for home loan interest rates.
“For this reason, I cannot stress enough how important it is for borrowers who have not had their home loan reviewed in the last 12 months to do so as soon as possible. Complacency could be preventing them from saving money on their repayments each month and potentially, paying down their loan quicker.”