December spike in fixed rate home loans dubbed a “new trend”

By Roisin Kelly-Goldsmith · · 2 min read
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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.

RELATED: Fixed rate home loans bounce back after four year slump 

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. 

Are you going to apply for a fixed rate home loan? Mozo is here to help you compare rates and features. Just head to our fixed rate home loan hub here or compare deals below.

Home loan comparisons on Mozo - last updated 13 August 2022

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

^See information about the Mozo Experts Choice Home Loan Awards

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