Despite back-to-back cuts by the Reserve Bank, borrowers are still keen on the security of a fixed rate mortgage new data indicates.
Mortgage Choice said that 24% of mortgages written in December were fixed – up from 21% in November. The proportion of fixed rate loans sold through the listed broker have increased for the past seven months and is up 13 percentage points since May.
"Consecutive cash rate cuts in November and December 2011 have not swayed Australian borrowers' desire for fixed rate loans," a Mortgage Choice spokesperson said. "It is possible borrowers' need for certainty around their home loan repayments, coupled with the affordability of fixed rate loans are the driving forces behind demand for this loan type."
Mortgage Choice credited the increased uptake of fixed mortgages in December to the fact that these products still have attractive rates.
"During December fixed rates were significantly lower than variable rates, in some cases the difference was one percentage point or more," the spokesperson said. "Our loan data shows fixed rates are now more in demand than they have been in over three and a half years at the expense of variable rates, which have lost popularity among new borrowers."
This information is provided by DPN Pty Ltd ABN: 94 630 700 186 Australian Credit Licence 514759. DPN Finance Pty Ltd is an authorised credit representative 504129 and related entity of DPN. Credit for Dream Big 100% Offset and Work Smart 100% Offset is provided by Adelaide Bank a division of Bendigo and Adelaide Bank Ltd, ABN 11 068 049 178 and Australian Credit Licence 237879. Casa Capace Operations Pty Ltd, NDIS provider number 4050038018 trading as Casa Capace.