Fixed-rate loans remain popular choice

Demand for fixed rate loans is on the rise, according to new data from Mortgage Choice.

According to the company’s latest national home-loan approval data, demand for fixed-rate home loans rose over the month, accounting for more than 24 per cent of all loans written throughout October 2018, this was an increase of over three per cent on the 12-month average.

“Demand for fixed rate home loans has been growing over the last few months and a number of factors could see this trend continue over the medium-term,” Mortgage Choice chief executive officer Susan Mitchell said.

“Rising variable interest rates would be worrying borrowers across the country who now seem to be making the switch to a fixed-rate loan.

“These borrowers, who may be concerned about rising interest rates would be looking to secure repayment certainty in what seems like an uncertain period for home loan interest rates.

“For this reason, I cannot stress enough how important it is for borrowers who have not had their home loan reviewed in the last 12 months to do so as soon as possible.

“Complacency could be preventing them from saving money on their repayments each month and potentially, paying down their loan quicker.

“An appointment to get a home loan health check could take as little as an hour.”

Across the country, borrowers in New South Wales were the most likely to fix their interest rate, with almost 30 per cent opting for a fixed-rate home loan – a rise of almost four per cent on the month prior.

This was followed by South Australia, where over 27 per cent of borrowers chose to fix and Queensland, where over 23 per cent of borrowers fixed the interest rate on their home loan.

Once again, Victorians were the least likely to fix the interest rate on their home loans, with 15.63 per cent opting to fix.

A rise in lenders’ wholesale funding costs and a heavily scrutinised banking sector have contributed to out-of-cycle rate hikes on home loan products and created a complex lending environment.

Ms Mitchell said that in this environment, it has never been more important to ensure you are seeking expert advice and getting a home loan health check at least twice a year.

“Lenders’ policies and preferences are constantly changing, which means if you don’t play an active role in the future of your home loan, you could get left behind.

“Looking ahead, borrowers feeling the sting of recent rate rises may want to consider fixing part or all of their home loan after seeking the guidance of a  qualified mortgage professional.”