December spike in fixed rate home loans dubbed a “new trend”
More Australians are abandoning the traditional variable rate home loans and signing up for fixed rate contracts instead, new data from Mortgage Choice has revealed.
According to the mortgage broker, fixed rate home loans accounted for nearly 20% of all home loan approvals in December, up from 17.39% the month before.
Chief Executive Officer of Mortgage Choice, John Flavell speculated the new trend was prompted by many lenders increasing interest rates in October.
“A lot of mortgage holders are now acutely aware that Australia’s banks can and will lift their variable rates as they see fit. As such, it isn’t surprising to see an increasing number of Australians opting for the security of a fixed rate home loan,” he said.
Variable home loans are still the number one preference for home loans in Australia, but a changing cash rate climate could see fixed rate home loans increase in popularity.
“Depending on what the Reserve Bank does with the official cash rate next month, I wouldn’t be surprised to see an increasing number of Australians looking to fix part or all of their mortgage,” Flavell said.
New South Wales was at the forefront of the trend with 25.35% of all home loans written up in December being fixed rate.
But the state with the lowest adopters of fixed rate home loans was Victoria, coming in at only 10.65%. This was the month RIEV data showed Victorian apartment prices were affordable for first home buyers and it was cheaper to buy homes than rent.
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