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Homeowners stick with variable rates
June 1, 2011
Homeowners remain largely unconcerned about the threat of an interest rate rise and are not rushing to fix their variable rate mortgages.
According to Loan Market CEO Dean Rushton, mortgagees seem unfazed by the Reserve Bank of Australia’s statement that interest rates need to rise “at some point.” Mr Rushton added that his company had not seen an increase in borrowers asking about fixing their home loan.
Rushton believes the RBA may again hold off on an interest rate rise next month as a slow in wage growth in the first quarter, a 1.3 percent drop in consumer sentiment and a 10-year low in mortgage approvals takes the pressure off the economy.
Rushton added that many consumers were reluctant to fix their mortgages as many still recall the swinging interest rates of 2008. Just before the GFC, more than 100,000 mortgage holders locked themselves into a fixed rate of 8 percent or more.
When the RBA announced reduced interest rates to try and stave off the worst effects of the crisis, many people missed out on substantial savings and are only just now emerging from their fixed terms.
Loan Market has seen an increase in enquiries from people coming off these fixed loans looking to refinance, Rushton said.
“So far this year, we have noticed an increase of almost 30 percent in borrowers wanting to get out of their fixed rate home loans. Almost all of these enquiries are from borrowers who have been stuck on a high fixed rate since 2008,” he said.
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