Fixed Rate Demand Falls

Posted on 26/04/2019  
Fixed Rate Demand Falls

Demand for fixed rate home loans fell in March, reveals new data from Mortgage Choice, prompting many lenders to reduce their interest rates for fixed-rate loans.
 
According to its latest national home loan approval data, demand for fixed rate home loans fell in March, accounting for 21% of all home loans written – a reduction of 1.38% from the previous month.
 
Mortgage Choice chief executive officer Susan Mitchell says it’s not surprising to see borrowers taking a tentative approach towards fixing their interest rate.
 
“There is a great deal of uncertainty surrounding the housing market at present, which could be weighing against borrowers’ decisions to commit to a fixed term,” she says, pointing to the upcoming Federal Election and increasing speculation that the RBA will cut the official cash rate soon.
 
“That being said, lenders would be acutely aware of borrowers’ reluctance to fix, and have in the last few weeks responded by cutting rates on some of their fixed rate products.
 
“Those looking to fix could enjoy great rates right now. Major lenders and smaller lenders alike are attempting to lure borrowers to their fixed rate products by announcing reductions of up to as much as 55 basis points," says Mitchell. 
 
Across the country, fixed rate demand is highest in New South Wales, with this type of product accounting for almost 26% of all home loans written throughout March.
 
This was followed closely by Queensland, where fixed rate demand accounted for 24% of all home loans.
 
The most popular home loan product among borrowers is ongoing discount variable rate loans, followed by basic variable rate loans.
 
“The home loan market is fiercely competitive at the moment and lenders are actively trying to entice high quality borrowers with attractive interest rates,” says Mitchell. 

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