Feb sees fixed rate home loan demand fall
While demand for fixed rate loans picked up in the latter half of 2018, February saw them drop by 1.05 per cent to account for just 22.82 per cent of all loans, new data from Mortgage Choice has shown.
The hike last year may have been in response to rate hikes on variable home loan products, but chief executive, Susan Mitchell, said the fall could be due to speculation around the Reserve Bank’s movements.
“Mounting speculation that the Reserve Bank may cut the official cash rate later this year may be weighing on borrower expectations around interest rates,” she said. “These borrowers, who are expecting interest rates to fall in the near term may be less inclined to lock in to a fixed rate.”
Mitchell said borrowers’ caution could also be compounded by continued property price falls in the nation’s capitals, which, according to the latest figures from CoreLogic, fell 0.9 per cent in February.
She said it was unsurprising to see an increase in demand for variable rate loan products given the current property markets, as those loans were more flexible.
“That being said, fixed rate loans are still an attractive option to people who are looking for certainty in their home loan repayments. This is particularly important at a time when there is considerable uncertainty in the market.”
“Fixed rate loans may be a suitable option for borrowers who foresee a potential change to their income or, budget constraints.”
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