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Millennials and Sydneysiders go for fixed rates

sydney sydney
Staff reporter 5 minute read

New research from Gateway Credit Union has found that more than 40 per cent of Australians between the ages of 18 and 29 would choose a fixed rate product.

Australians are eager to lock in their home loan rate as increasing uncertainty about interest rate rises continues to circulate in the broader market. According to the new Gateway research, 35.5 per cent of Australians looking to take out a home loan would opt for a fixed rate loan, ahead of a split rate home loan (34 per cent) or a variable rate home loan (30.7 per cent).

Gateway CEO Paul Thomas believes the findings suggest borrowers have been impacted by the constant speculation around changing market conditions.

“We know property prices are sky high, compound that with low wage growth, high levels of household debt and out-of-cycle rate hikes and you can expect that consumers might be worried about maintaining a loan, especially if they have no control over repayments because of a fluctuating rate,” Mr Thomas said.


“A fixed rate home loan means borrowers would have peace of mind in uncertain times and the findings suggest that it’s a key consideration right now,” he said.

Of the generations, the results reveal the younger cohort (18-29 years old) are most inclined to take out a fixed rate home loan with 40.8 per cent saying they would choose that product over a variable or split rate home loan. This was followed by the 50+ age bracket at 36.4 per cent, and the 30-49 age bracket at 30.9 per cent.

“People in a younger and some older age demographics can have less disposable income – being at the beginning of their careers or transitioning into retirement – so it would make sense that they’d be the age brackets most interested in locking in their home loan rate. It could offer them stability and a better opportunity to budget their finances,” Mr Thomas said.

When asked how long consumers would fix their rate, Australians clearly favour longevity with over half (55.9 per cent) choosing five years, followed by three years (23.1 per cent), two years (15.1 per cent) and one year (5.9 per cent).

Of the major cities, Sydneysiders were most eager to lock in a fixed rate home loan with 40.1 per cent saying they would choose this product over a variable or split rate product. Brisbanites followed closely with 35.1 per cent, followed by Melbourne (33.3 per cent), ACT (26.3 per cent), Adelaide (25.8 per cent), Perth (21.1 per cent) and Hobart (18.2 per cent).


“It isn’t surprising seeing Sydney top the list given it has the most heated property market of the capital cities. Demand for fixed rate loans seems to be fairly congruent with property prices around the country,” said Mr Thomas.

[Related: Westpac group hikes fixed rates]

Millennials and Sydneysiders go for fixed rates
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James Mitchell

James Mitchell

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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