The demand for fixed rate loans is on the rise as lenders hike rates on investment loans.
New data from Mortgage Choice
shows fixed rate home loans rose to 18.46% of all loans in July, up from 17.58% in June. Mortgage Choice chief executive John Flavell said lenders' recent moves to raise rates on investment loans could account for the move toward fixing.
“Our data would suggest the threat of rising interest rates was enough to encourage more borrowers to fix their mortgage,” Flavell said.
Flavell said the trend toward fixed rates could continue as banks continue to change their policies and pricing.
“I wouldn’t be surprised to see another slight uptick in fixed rate home loan demand next month as borrowers look for some stability and certainty around their mortgage repayments,” he said.
While fixed rate loans saw an uptick in popularity, the vast majority of borrowers continued to opt for variable rates, and ongoing discount rates were particularly popular, accounting for 45.37% of all Mortgage Choice approvals in July.
"There is a lot of change happening in the home loan environment at the moment, which is highlighted by the fact that fixed rate demand varies quite substantially from month to month," Flavell said.