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Fixed rate demand rises by 6% in September

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Reporter 1 minute read

Borrower demand for fixed rates increased in September, rising off the back of out-of-cycle rate hikes from the banks, according to Mortgage Choice.

The latest internal data from Mortgage Choice has revealed that demand for fixed rate home loans increased by 6 per cent month-on-month, from 18 per cent in August to 24 per cent in September — the highest level since December 2018.

The research found that on a state-by-state basis, borrowers in Queensland were the most likely to choose a fixed rate mortgage (26.4 per cent), followed by NSW (26.2 per cent), South Australia (23.8 per cent), Western Australia (19.3 per cent) and Victoria (16.6 per cent).

Mortgage Choice CEO Susan Mitchell said that the shift in borrower demand was largely driven by recent out-of-cycle rate changes.

“September’s data is unsurprising when you consider the recent rate hikes to variable rate home loan products announced by three of the four major banks. This would no doubt be encouraging more borrowers to fix,” Ms Mitchell said.

“History has shown that when the majors lift their rates, smaller lenders are quick to offer competitive pricing on their own products in order to attract borrowers in search of a better deal. However, we have seen limited market movement due to a combination of factors such as the regulatory environment and increasing wholesale funding costs, which would no doubt be affecting smaller lenders. 

“Institutions across the country have become more selective about the customers they lend to, vying for borrowers in a healthy financial position. Indeed, lenders are seeking high-quality borrowers who present low risk.”

Ms Mitchell encouraged borrowers to review their home loans in light of recent changes in the mortgage market.

“This highlights the need for borrowers to review their current home loan and financial situation with the help of a qualified mortgage professional and financial adviser to ensure they are best placed to secure a competitive deal when they choose to switch loan providers,” the CEO said.

[Related: Borrowers still opting for variable rates, despite hikes]

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