Fixed-rate demand hits four-month high

The latest data from Mortgage Choice reveals fixed rates accounted for 25.45 per cent of all loans written last month – up from 24.19 per cent the month before.

Mortgage Choice spokesperson Jessica Darnbrough said the lift in fixed-rate demand was expected as Australia’s lenders have been quite aggressive in the fixed-rate arena recently.

“At the end of July and the beginning of August, many of Australia’s lenders actively cut the interest on their suite of fixed-rate products, which encouraged more borrowers to opt for a fixed-rate mortgage,” Ms Darnbrough said.

“It usually takes a month or two for us to see any increase in demand for a particular product flow through the data, but we are definitely starting to see that now,” she said.

Across the country, fixed rates were most popular in New South Wales, accounting for 30.75 per cent of all loans written in September – up from 25.30 per cent in August.

Fixed-rate demand was also up in Victoria where they accounted for 18.10 per cent of all loans written – up from 16.70 per cent the month before.

Despite the growing demand for fixed-rate products in some states, Ms Darnbrough said variable-rate home loans continue to dominate the market, accounting for 74.55 per cent of all loans written across the country in September.

“Once again, ongoing discounted rates were the most popular of all the variable-rate products, with this type of home loan accounting for 38.01 per cent of all loans written in September,” she said.

“Even though we saw a lot of lenders trim the interest on their suite of fixed-rate products recently, it is clear the majority of borrowers are happy to take their chances on a variable-rate mortgage.”

Ms Darnbrough said that while variable home loan rates are still sitting at historical lows it isn’t surprising to see them remain popular with borrowers.

“That said, with fixed rates also sitting at historical lows, borrowers can rest assured that regardless of the product they choose, they should be able to snag a very competitive rate,” she said.