Borrowers reluctant to opt for fixed-rate home loans

Demand for fixed-rate home loans has dropped to a record low, a new report has found.

The study by Mortgage Choice, the independent mortgage broker, revealed that fixed loans accounted for just over one per cent of its new home loan approvals in December 2009. This is the lowest level since it began recording such data in January 2003.

Mortgage Choice senior corporate affairs manager, Kristy Sheppard said: "Australians taking out home loans are looking at the added expense of fixing the interest rate and deciding that at the moment it’s just not worth the extra dollars."

She added that mortgage buyers are choosing to compare home loan types, with many feeling more comfortable paying less and "riding the variable rate rollercoaster". This is in spite of predicted interest rate rises this year, Ms Sheppard noted.

This week, Chris Richardson, a director of Canberra’s Access Economics, told the Courier-Mail that Australia’s banks may not pass on the full Reserve Bank interest rate rises later this year as they seek to attract new customers.

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