Conservative attitudes drive increase in fixed rate home loans
Australian investors' "conservative attitude" has driven an increase in fixed rate home loans in August, according to Mortgage Choice.
Lenders introduced a range of reduced fixed rate loans which were snapped up by investors, increasing fixed interest rate home loans by five per cent to 20 per cent of new loan approvals, it said.
Company spokesperson Belinda Williamson said the "prevailing conservative attitude of Australians" was reflected in the data. She said more investors were locking in the interest rate on all or part of their loan in order to manage payments and take control of their finances.
She said concern about the Australian economy, increasing utility bills and general increases in the cost of living coupled with an expectation of fewer rate cuts were driving investor decisions.
The most popular fixed rate term on Mortgage Choice's lender panel - the average three year loan - was about 30 percentage points lower than the average basic variable rate home loan and sat at just over 6 per cent, according to Williamson.
"Lenders have been tweaking their fixed rate loans, making the price of such loans more competitive in some cases when compared to variable rates," she said.
However, fixed rate loans did drop in Western Australia by one per cent, while basic variable loans increased across the board by one per cent and reached a 14-month high of 21 per cent of new loans.
Williamson said the surprise was that demand for discount rate loans dropped for the first time in five months, falling from 38 per cent to 44 per cent of new loans.
Standard variable rates fell by one per cent to 17 per cent, while the uptake of credit and introductory rate home loans remained steady.
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