Broker News

Fixed rate demand continues to climb

Fixed rate demand increased for the fourth consecutive month according to new December home loan figures from Mortgage Choice.

The number of fixed rate loans as a proportion of overall loans written increased from 19.51% in November to 22.04% in December.

New South Wales posted the strongest demand for fixed rates, where they accounted for 27.34% of all loans written last month, followed by Queensland (24.64%).

However, in Victoria fixed rates comprised just 12.69% of all loans written in December – the lowest in the country.

Mortgage Choice CEO, John Flavell, says borrowers are seeking to fix their home loan rate amid speculation the RBA could lift the official cash rate.

In fact, Flavell believes a RBA rate hike is more likely than not.

“In December, the US Central Bank announced it would increase the Federal Funds rate by 25 basis points to 0.75%. Furthermore, the bank indicated that the Federal Funds rate could rise by a further 75 basis points throughout 2017 – through three separate rate increases,” Flavell says.

“Closer to home, many of Australia’s lenders have already started to raise rates across their suite of home loan products.”

Flavell also notes the RBA’s stance that the time for easing the monetary policy setting has now passed.

“All of these factors combined would suggest that a rate increase by the Reserve Bank could be right around the corner.

“Borrowers understand this and that is why a growing proportion of mortgage holders are opting for fixed rate products,” he concludes.

Published on: Friday, January 13, 2017

blog comments powered by Disqus