Fixed rate demand dipped slightly over the month of September, according to new data.
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The latest national home loan approval data from Mortgage Choice found fixed rate home loans accounted for 28.33 per cent of all mortgages written throughout September, down from 31.05 per cent in August.
“While we did see a slight dip in overall demand for fixed rate products last month, the proportion of borrowers looking to fix their mortgage is still significantly higher than we have seen historically,” Mortgage Choice chief executive officer John Flavell said.
“Traditionally, less than 25 per cent of all borrowers chose to fix part or all of their home loan. In the last six months however, the average proportion of borrowers looking to fix their rate has jumped to 27.81 per cent. With speculation mounting that the Reserve Bank of Australia may soon raise the cash rate, many borrowers are left wondering whether or not they should fix their mortgage,” Mr Flavell said.
“Over the past few months, we have seen positive economic data emerging from both the domestic and global economies.
“In the US, the Federal Reserve has lifted the cash rate three times within the last 12 months. Closer to home, we have seen a strong improvement in employment, and a slight bounce back in consumer sentiment and business conditions.
“As a result, a number of economists are starting to suggest that we may see a rate rise as early as mid 2018.
“I wouldn’t be surprised to see the Reserve Bank of Australia lift the official cash rate sooner rather than later. Of course, if and when rates do rise is anybody’s guess.
“Two questions I am often asked are: have interest rates bottomed, and, is now the time to fix?
“In my experience, it is very hard to pick the absolute top or bottom of any market – and this is especially the case when it comes to interest rates.
“Instead of trying to pick the very bottom of the rate cycle, borrowers should concentrate on selecting a product that works for them and their unique financial situation.
“The one thing I would say is there is a lot of competition and moving parts in the market at the moment, so it is critical that borrowers do not take a set and forget attitude towards their mortgage.”
Mr Flavell said borrowers should review their home loan and interest rate at least once a year.
“Over the last few weeks, we have seen a number of lenders cut the interest rates across their suite of products in a bid to attract more business. As such, there is a lot of competitive variable and fixed rate products available. Many lenders are currently offering rates below 4 per cent for fixed rate periods of up to three years.”