Wary buyers opt for fixed interest mortgages
Fixed mortgage rates hit a four year high and New South Wales continues to dominate the market, accounting for two out of five new mortgages in Australia.
That is according to the AFG Mortgage Index, which found that 25.4 per cent of all new home loans were fixed rate, increasing steadily from 6.6 per cent in March 2011.
"The reason that fixed rate home loans are at such record highs is quite simply because many borrowers are concerned about the future of interest rates," said AFG Mortgage general manager of sales and operations Mark Hewitt.
According to AFG Mortgage, first home buyers in WA are more active than any other states, comprising 20 per cent of the market ahead of NSW (13.4 per cent), Victoria (15.2 per cent) and Queensland (16 per cent).
For the month ending March 2012, the average new home loan across Australia was above $400,000 for the second month in a row. NSW accounted for$467,278 in average mortgage size, followed by Western Australia on $418,589 and Victoria on $397,739, the index stated.
Loan-to-value ratios have remained steady suggesting that buyers are not taking on greater levels of debt to fund their purchases and reflects the large number of investors currently in the market, the majority of whom use equity in one property to help pay for another, according to AFG Mortgage.
"Victoria has a marginally lower level of investment interest, just under 40 per cent and in Queensland, mortgages for investors comprise about a third of all home loans," the index stated.
Hewitt said the anxiety surrounding interest rates may also account for the weighting of investors in the property market compared to the number of first home buyers and upgraders.
Lenders are currently offering out of cycle rate rises but the Reserve Bank of Australia could stimulate confidence in the mortgage market by cutting interest rates, he added.
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