Following a notable decrease in fixed rate loan demand as consumers waited out the federal election and cash rate move, recent data has shown a rebound in the readiness of borrowers to lock in rates.
According to data from Mortgage Choice, demand for fixed rate home loans rose over the month of May, accounting for 22.47% of all home loans written as compared to 21.81% over the last twelve months.
Mortgage Choice CEO Susan Mitchell said, “When you consider what has been happening in the market, the increase in demand is hardly surprising. Lenders on our panel have been aggressively discounting fixed rate home loan products, which has been effective in enticing more borrowers to commit to a fixed term.”
The Mortgage Choice data showed that fixed rate demand was highest in Queensland where it comprises 26% of all home loans, and lowest in Victoria where just 15% of borrowers have chosen this type of product.
According to Mitchell, certain borrowers are ideally suited to benefit from locking in the current rates.
She explained, “This is good news for borrowers seeking repayment certainty. In particular, for first home buyers who are looking to take advantage of government schemes and record low interest rates to enter the property market for the first time.”
However, Mitchell has encouraged brokers and borrowers to not grow complacent, but to work together to ensure that the consumer has the loan product that best meets his or her needs.
“While news of low interest rates is certainly going to pique borrower interest, it’s equally important that borrowers remember the interest rate isn’t the only component of a home loan and they should look for the right loan product and features for their short and long-term needs,” she said.
“As we approach the end of the financial year, I also encourage existing borrowers to speak to their mortgage broker to get their home loan reviewed. After all, the number of rate cuts we have seen in the last few weeks alone could mean there are more suitable and more affordable loan products on the market than the one they are currently in.”
