More than 20 per cent of borrowers opted for a mortgage with a fixed rate last month, new national approval data from Mortgage Choice has revealed.
According to the mortgage company’s home loan approval data, fixed-rate home loans accounted for 22.22 per cent of all loans written in February, down slightly from 22.97 per cent in January.
“While fixed-rate demand was down slightly in comparison to last month, the fact that over 20 per cent of borrowers are choosing to fix their mortgage is still significant,” Mortgage Choice chief executive officer John Flavell said.
“Of course, given that so many lenders have raised their interest rates over the past few weeks, I am not surprised to see one in five borrowers opting for a fixed-rate home loan.”
Looking ahead, Mr Flavell said he wouldn’t be surprised to see even more borrowers choosing to fix part or all of their mortgage, as lenders continue to lift their interest rates out of cycle.
“In recent weeks, the Reserve Bank of Australia’s governor Philip Lowe has made it clear that future rate cuts are now more unlikely than likely. With this in mind, it would appear the only way for rates to go is up,” he said.
“As more lenders start to lift their rates, we may see more borrowers choosing to fix their mortgage in a bid to avoid further rate hikes and provide themselves with some certainty around their regular mortgage repayments.”
Across the country, fixed-rate demand was highest in New South Wales, with this type of product accounting for 24.17 per cent of all home loans written throughout the month of February.
Fixed-rate demand in Queensland accounted for 23.32 per cent of all loans written in the state.
Overall, however, variable rate home loans – specifically ongoing discount mortgages – remained the most popular product among borrowers.
Ongoing discount home loans accounted for 44.34 per cent of all mortgages written in Australia.
Mr Flavell said with interest rates continuing to sit at near record lows, borrowers should be able to secure a good deal regardless of whether they choose a fixed or variable rate.
“At the end of the day, there is no right or wrong answer when it comes to selecting a home loan product, it all comes down to personal preference.”
[Related: Fixed-rate demand steadily increasing]
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