Borrowers have clearly been irked by the uncertainty surrounding the Australian housing market right now, with demand for fixed rate home loans dropping in March as a result, new national home loan approval data from Mortgage Choice shows.
According to the latest data, fixed rate home loans accounted for 21 per cent of all home loans written, which was a reduction of 1.38 per cent from February.
Demand for fixed rates was highest in New South Wales, where it accounted for almost 26 per cent of all home loans written in March, followed by Queensland at 24 per cent. Borrowers in Victoria were the least likely to fix their interest rate, with just 14 per cent choosing fixed rates in March.
Mortgage Choice chief executive, Susan Mitchell, said it was unsurprising to see demand for fixed rates fall given the uncertainty surrounding the housing market, which could be weighing against borrowers’ decisions to commit to a fixed term.
Mitchell also said the outcome of the Federal Election carried potential policy implications, and she speculated this could be affecting people’s willingness to buy.
“There is also increasing speculation that the RBA will cut the official cash rate in the short-term,” she said.
In saying this, as borrowers show disinterest in fixed rates, Mitchell said lenders had responded by cutting rates on some of their fixed rate products.
“Those looking to fix could enjoy great rates right now,” she said. “Major lenders and smaller lenders alike are attempting to lure borrowers to their fixed rate products by announcing reductions of up to as much as 55 basis points.”
Mitchell said her advice to borrowers who wanted to hedge out the risk of interest rate changes would be to seek assistance from their local mortgage broker.