Fixed rate demand surges in April

“Demand for fixed rate home loans hasn’t been this high since November 2014, when it accounted for 26.98 per cent of loans written,” Mortgage Choice chief executive officer John Flavell said.

“Over the last couple of weeks, we have seen many of Australia’s lenders increase the interest rates across their suite of home loan products,” he said.

“Some lenders have increased their variable rates by as much as over 20 basis points. Knowing this, I am not surprised to see an increase in the proportion of borrowers opting for the security of a fixed rate product.”

Mr Flavell said he expected to see further increases in fixed rate demand as interest rates continue to rise over the coming weeks and months.

“With Australia’s lenders making changes outside the Reserve Bank’s monthly board meetings, we may see more borrowers choosing to fix their mortgage in a bid to avoid further rate hikes and ultimately give themselves a level of certainty and stability around their mortgage repayments,” he said.

Across the country, fixed rate demand was highest in Queensland, with this type of product accounting for 29.88 per cent of all home loans written throughout the month of April.

NSW wasn’t far behind, with fixed rate demand accounting for 28.06 per cent of all loans written within the state.

Variable home loan rates remained the most popular product amongst borrowers in Australia. In particular, ongoing discount home loans were the most sought-after, with this product accounting for 43.04 per cent of all loans written.

“As we have seen over the past several weeks, the lending space is rapidly changing, but it is important to remember that home loan rates are still low by historical standards,” Mr Flavell said.

[Related: Big four bank lifts fixed interest rates]