Fixed rate loans becoming more popular
Demand for fixed rate home loans increased over the month of July in response to multiple banks increasing interest rates, according to an industry expert.
According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 18.46 per cent of all loans written across Australia throughout the month of July, up from 17.58 per cent in June.
Mortgage Choice chief executive John Flavell said this shift in loan type preference could be in response to interest rate changes made by multiple banks following APRA’s crackdown on investor lending.
“Over the month of July, many lenders announced they would raise their interest rates across some products,” Mr Flavell said.
“The price increases come as many of Australia’s lenders continue to make some significant changes to their lending practices in a bid to curb investment lending growth.
“Our data would suggest the threat of rising interest rates was enough to encourage more borrowers to fix their mortgage.”
New South Wales borrowers had the highest demand for fixed rate loans, with 26.83 per cent of all loans written across the state in July of that type.
Queensland followed with fixed rate home loans accounting for 16.33 per cent of all loans written across the state.
Interestingly Western Australia was the state with third highest demand for fixed rate home loans, with 15.35 per cent of all loans being fixed rate home loans.
Demand in Victoria and South Australia was the lowest with fixed rate home loans accounting for 11.87 per cent and 10.68 per cent of all home loans written across the states respectively.
“I wouldn’t be surprised to see another slight uptick in fixed rate home loan demand next month as borrowers look for some stability and certainty around their mortgage repayments,” Mr Flavell said.
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