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New analysis has revealed that Australians are reluctant to make the switch to fixed rate home loans despite a number of lenders slashing their fixed rates in recent weeks.
According to comparison website RateCity.com.au, 11 lenders have cut their three-year fixed home loan rates in the past fortnight.
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However, just one in 10 borrowers are taking up the new offers.
“Historically, Australians have missed the boat when it comes to fixing, with many tending to ‘panic fix’ when rates were highest,” RateCity money editor Sally Tindall said.
“For example, when the cash rate peaked at 7.25 per cent in March 2008, more than a quarter of new loans were fixed.
“By comparison, when rates plummeted to three per cent the following year people shied away from fixing and as few as four per cent of new loans settled were fixed.”
Ms Tindall noted that home loan rates are currently at 60-year lows and with this latest round of fixed rate cuts “the argument for fixing is stronger than ever”.
“There are 142 mortgages with a rate under 4.5 per cent and 11 under 4.0 per cent, fixed until Christmas 2018,” she said.
Meanwhile, the RBA has suggested a rate cut might be on the horizon next year.
“Of course no-one has a crystal ball,” Ms Tindall said, “so you do have to make that tough decision as to whether you’ll be better off on a variable rate or a fixed rate over the next three years.
“The peace of mind a fixed loan brings may be what some Australians are looking for in this time of historically low rates.”
[Related: Fixed-rate demand hits four-year low]
