Mortgage Choice has reported a significant increase in demand for fixed rate home loans over April as banks continue to lift variable rates out-of-cycle.
According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 26.47 per cent of all loans written in April, up from 20.89 per cent in March.
“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]
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James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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