Fixed rate loans spike as banks circle

On a state-by-state look, fixed rate mortgages were most popular in Queensland at 26.47 per cent of all loans, while they were the least popular in Victoria at 16.67 per cent of all loans.

Breaking the data down to owner occupier and investor loans, fixed rate investor loans for owner occupiers rose from just over 5 per cent to 20 per cent, while investor loans rose by 1 per cent to 33 per cent.

While a smaller figure, fixed loans have been steadily rising over the last three months, from 31 per cent in June, 32 per cent in August, and September’s 33 per cent.

On the rising demand, Mortgage Choice CEO Susan Mitchell said this demand had been anticipated due to the current lending market.

“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.”

As home loan interest rates look like they could rise further, Ms Mitchell recommended for borrowers to consider fixing part or all of their loan to protect themselves from further rate rises.