Fresh figures from a major brokerage have revealed that consumer demand for fixed rate home loans dipped in March, accounting for just over 20 per cent of all loans written during the month.
According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 20.89 per cent of all loans written in March, down from 22.22 per cent in February.
Commenting on the figures, Mortgage Choice chief executive officer said he was “somewhat surprised” to see a decrease in demand for fixed rate home loans, given that many Australian lenders have recently raised their rates.
“While some lenders increased their variable rates by as little as 3 basis points, others were quick to increase their variable rates by over 20 basis points across some of their products,” Mr Flavell emphasised.
In light of this, Mr Flavell said that fixed rate demand could potentially increase as more borrowers look to lock in a fixed rate ahead of any future rate hikes.
“There is no doubt that interest rates will continue to rise over the short to medium term. As and when this happens, I think we will see more borrowers looking for interest rate stability and security,” he said.
Breaking the result down by state, fixed rate demand was highest in Queensland, with fixed rate loans accounting for 24.74 per cent of all home loans written throughout March.
This was closely followed by NSW, where fixed rate home loans accounted for 23.13 per cent of all loans.
Meanwhile, variable rate home loans – particularly ongoing discount mortgages – accounted for 40.84 per cent of all mortgages written during the month.
[Related: Banks move on interest rates out of cycle]
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