Cautious home loans customers opt for fixed interest rates

Wednesday 03 August 2011

Article by Mozo

Aussies have been increasingly eager to take out home loans with fixed interest rates over the past few weeks, new figures indicate.

Fixed rate mortgages 'more popular'

According to Mortgage Choice, the number of applications for these products has been higher than has been seen at any other point over the last five months.

Kristy Shepherd, senior corporate affairs manager for the firm, suggested that speculation about a hike in interest rates later this year could be one of the drivers of this trend.

According to HSBC's Paul Bloxham and Craig James of CommSec, the Reserve Bank of Australia (RBA) is more likely to increase the cash rate this year than drop it.

However, chief economist at Westpac Bill Evans suggested that the RBA may cut rates within the next 12 months.

Ms Shepherd said the constant uncertainty over interest rate changes has led many home loans customers to "simply lock in their rate, rather than feel their stomach churn with each piece of speculation".

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