More borrowers are taking advantage of low fixed rates and locking in their home loans at levels not seen since the global financial crisis, research shows.
RateCity data shows almost one third of all its home loan applications in April, and 22 percent in March, were for fixed rate mortgages. Just 16 percent of all loan applications in February were for fixed rates.
Australian Bureau of Statistics data also shows a growing interest in fixed rates among borrowers, with 18 percent of the new home loan market opting for fixed rates in March – the highest proportion of fixed rates recorded in more than five years.
Alex Parsons, chief executive of RateCity, said many borrowers were choosing to fix, despite variable rates continuing to fall.
“It would be unusual to see more borrowers fixing now that variable rates have fallen, but borrowers are taking advantage of the low rates on offer – many fixed rates are lower than variable and they are still falling,” he said.
Is now the time to fix?
Over the last 30 years there have been few occasions where fixed rates have been lower than variable rates. But now appeared to be one of them, he said.
RateCity shows the average two-year fixed rate is 5.17 percent, while the average variable rate is 5.74 percent. However, it is possible for borrowers to find both fixed and variable rates below 4.7 percent through the site.
Some experts believe now is the perfect time to lock in at least part of your home loan rate.
Finance commentator Ross Greenwood said fixed rates are “just about as cheap as [they have] ever been”. And while borrowers are warming to fixed rates, they still only account for a small portion of the market.
“We’re all waiting to see if rates go any lower,” he told morning news program Today. “But the opportunity is now – take advantage while you can, before the panic sets in.”
Meanwhile, Mitchell Watson, analyst at financial services researcher Canstar, said even back when interest rates did bottom out in 2009, we didn’t see interest rates as low as below 5 percent.
“There is no telling how low fixed interest rates will go but obviously they will have come to a point where they can’t go any lower,” he told News Ltd last month.
He said a split loan with a fixed and variable part is a good option for those unsure which way to go.