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Fixed rate demand continues to slide

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Reporter 4 minute read

Borrower demand for fixed rate mortgages has fallen for the fifth consecutive month, new data has revealed.

Demand for fixed rate home loans has dropped by 74 basis points, with 22.07 per cent of home loans approved in January with fixed rates, according to the latest home loan approval data from Mortgage Choice.

“We started to see demand for fixed rate home loans drop off in September 2017, and it would appear that [the] trend has continued right into the new year,” Mortgage Choice chief executive officer John Flavell said.

Mr Flavell noted that he wasn’t surprised by the figures, and he attributed the record low cash rate to the decline in demand.


“Of course, this drop in fixed rate demand is not surprising when you consider that the Reserve Bank of Australia has kept the official cash rate on hold for 17 months,” the CEO said.

“And, with all signs suggesting that that cash rate is likely to remain lower for longer, borrowers are feeling increasingly comfortable opting for a sharply priced variable rate home loan.”

Variable rate mortgages made up 77.97 per cent of loans approved. However, Mr Flavell encouraged more borrowers to consider the “sharp” fixed rate loans offered by lenders.

“At the end of the day, the type of home loan a customer chooses will all come down to their unique financial situation.

“While we are seeing fewer borrowers locking into fixed rate mortgages, it’s important to note that some lenders are still offering very sharp rates in this area. If borrowers feel more secure in a fixed rate product, they should consider travelling down this path.” 

Demand for fixed rates was highest in Queensland, with fixed rate loans making up 26.33 per cent of approved home loans in January, up from 19.91 per cent in December.


Demand for fixed rates in New South Wales was second highest in the country, with 24.88 per cent fixed rate home loan products approved in the same period.

Fixed rate demand was lowest in Victoria for the second month in a row, with 14.35 per cent of loans with fixed rates approved.

Mr Flavell expects demand for fixed rate home loans to increase in the event of a rise in the cash rate from the Reserve Bank of Australia. 

He said: “We may continue to see more people choose a variable rate home loan, particularly if the Reserve Bank of Australia continues to leave the official cash rate on hold. 

“Borrowers are happy and content to ride the variable rate wave at the moment. Of course, that could all change in an instant if the Reserve Bank of Australia was to start lifting the cash rate.”

[Related: Fixed rate demand continues to fall]

Fixed rate demand continues to slide
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