Fixed Rates Stay Popular With Borrowers

home loan products (january 2014)Demand in Australia for fixed rates home loans is still sitting at record highs even though the number of borrowers taking out fixed rate mortgages dropped slightly in January.

According to new home loan approval figures from Mortgage Choice, fixed rates accounted for 27.43% of all loans written in January – down 5.63% from December.

Local Mortgage Choice franchise manager Jason Coviello said “while the demand for fixed rate home loans had fallen slightly in January, this type of product continued to be very popular with borrowers sitting at levels not seen since 2008”.

“If we look back at the last 10 years, fixed rates, on average, accounted for 17.63% of all home loans written. This almost 10% less than the current demand for this type of products,” he said.

According to Jason, demand for fixed rate products is likely to remain strong, especially as more lenders sharpen their rates in this area.

“During January, we saw several lenders cut the interest on their fixed rate products. Most notably, NAB trimmed their four year fixed home loan package rate to 5.44% – a 20 year low,” he said.

“All of Australia’s lenders are competing very aggressively on price within the fixed rate arena, and while this is happening more borrowers will opt to fix their mortgage.”

Further, Jason said even in his business he can see that borrowers are increasingly flocking to the safety of fixed rate home loans as it provides them with certainty around their mortgage repayments.

“In the current economic environment and with the Reserve Bank keeping its cards close to its chest, it is not surprising to see a large percentage of borrowers opting for the safety of a fixed rate home loan.”

Across the country, fixed rate products proved most popular in NSW, with 33.62% of borrowers opting for a fixed rate home loan in January. Queensland was next, with 30.77% of borrowers opting for a fixed rate product, while in Western Australia, Victoria and South Australia, fixed rates accounted for 21.39%, 21.20% and 19.78% respectively.

home loan products by state (january 2014)

However, overall, variable rate home loans continue to prove the most popular amongst borrowers, accounting for 72.57% of all home loans written in January.

If you are interested in discussing whether fixed or variable rates are right for you, or reviewing your home loan options, contact Jason or Daniel at any time on:

Ph: (08) 9220 5200



DANIEL EIGENMANN. Daniel is the franchise manager for Mortgage Choice in Perth and the Western Suburbs area. Daniel is an Authorised Credit Representative of Mortgage Choice Ltd (CRN# 446566).