Demand for fixed-rate home loans rose in May, accounting for 22.47% of all home loans written, according to data from Mortgage Choice.
The condition of the market played a significant part in the recent results, said Mortgage Choice Chief Executive Officer Susan Mitchell. “Over the last 12 months, fixed rates have accounted for 21.81% of all loans written. When you consider what has been happening in the market, the increase in demand is hardly surprising,” she said. “Lenders on our panel have been aggressively discounting fixed-rate home loan products, which has been effective in enticing more borrowers to commit to a fixed term. With rates as low as 3.49% p.a., it’s unsurprising to see an increasing proportion of borrowers choosing to fix.”
Queensland posted the highest fixed-rate demand, with 26% of borrowers opting for the type of home loan. Western Australia followed, with 25% of borrowers choosing to fix the interest rate on their home loan. Victoria, meanwhile, recorded the smallest percentage of borrowers (15%) who chose the type of product.
Data revealed that the most popular home-loan products were ongoing discount variable-rate loans followed by basic variable rates.
Mitchell said that it is an ideal time to fix part or all of home loans since fixed-rate loan pricing at present offers good value by long-term standards. She reminded borrowers, though, to assess their needs before deciding what type of loan to avail.
“While news of low interest rates is certainly going to pique borrower interest, it’s equally important that borrowers remember the interest rate isn’t the only component of a home loan and they should look for the right loan product and features for their short and long-term needs,” she said. “It pays to be proactive when it comes to your home loan interest rate, as complacency could stop you from potentially saving thousands each year. I advise borrowers to review their home loan at least once a year to ensure their current loan is still meeting their needs. After all, the number of rate cuts we have seen in the last few weeks alone could mean there are more suitable and more affordable loan products on the market than the one they are currently in.”
