Fixed rates finally gaining traction

by Julia Corderoy13 Aug 2014
Three weeks after the major banks announced slashing a range of fixed mortgage rates to record lows under 5%, borrowers are starting to jump on board.

It took a while for the rate cut to woo borrowers, with recent data revealing Australians prefer to take the gamble with variable rates, and demand for fixed rates actually dropped in July.

Westpac’s head of home ownership, Melanie Evans, told the Sydney Morning Herald that the proportion of new fixed rate home loans was nearing 30%, compared with 15-20% a few weeks ago. 

Almost 20% of these new home loan customers were even locking themselves in the five-year fixed rate – a significant increase compared with a few weeks earlier. 

NAB’s general manager of consumer lending, Melissa Reynolds, also told the Herald that they had experienced an increase in demand for fixed rates, with one in four home loan applications locking in a fixed interest rate. 

"NAB has seen a substantial increase in demand from home buyers for fixed-rate home loans since we cut rates to 20-year lows of less than 5 per cent in July," Reynolds told the Herald.

"In particular, interest in longer-term loans is at levels we haven't seen before as customers take advantage of rates under 5 per cent and the opportunity to have certainty on their mortgage repayments."