Fixed rate loans in high demand
With the reserve banks latest decision to stay put at 2.50%, it would appear the rate cutting cycle is coming to an end as borrowers flock to lock in low rates through fixed rate loan products in November.
Fixed rate home loan applications accounted for over 30% of all home loans issued in November, the highest level in more than 5 years. In the same period last year, fixed rate loans accounted for just over 20% of all loans.
Fixed rate demand increased in every state, with Queensland seeing the biggest jump, surging 5% to sit at just under 40% of all loan applications. Borrowers in New South Wales weren't far behind in demand for fixed loans through November.
Variable rate home loans also dropped to a long time low, accounting for just over 69% of all home loans written in November.
With interest rates staying at low, low levels for at least another two months more people are asking the question is it time to fix?
Although sentiment would suggest the home loan market has finally bottomed out, Australia's interest rates are still comparatively high when compared to most countries in the developed world.
One hint from lenders that home loan rates are set to rise is the gradual creeping upwards of 3-5 year fixed rates home loans, as banks cover themselves for an expected mid-term rate rise.
General consensus is that rates will rise but whether they have a little lower to go first is the question. Depending on the size of your loan and market conditions, the cost of cancelling a fixed rate home loan can be thousands of dollars, so fixing is not a decision to be taken lightly.
Borrowers can research and compare the best low fixed rate home loans but would also be wise to consider the benefits of partially-fixing their home loan, rather than committing the whole lot, just in case rates do have lower to go.