A new survey from the Mortgage & Finance Association of Australia (MFAA) has revealed that fixed rate home loans are now more popular than variable rate loans among Australians.
The home finance survey found that 28.3% of Aussies are likely to choose a fixed rate loan compared to just 19.9% who would choose a variable rate loan, if they borrowed or refinanced in the next six months. Around 31.6% say they would hedge their bets and select a mixture of both variable and fixed rates in their loan.
Phil Naylor, chief executive, MFAA, said people are still cautious about interest rate rises, despite a much lower expectation of this now, compared to six months ago.
He said: "Coming off the back of three rate rises last year, most new home loan borrowers are choosing the security of a fixed rate home loan, or opting for a split loan to maintain flexibility and hedge their bets against changes in interest rates."
He added that 39.2% of respondents believed interest rates would remain the same in the next quarter, but consumers were still seeking certainty by locking in rates.
The survey also researched the amount of income people were putting into their home loans each month.
It found that the average amount of household income to go into a home loan was 31.9%, while 16.4% of people claim to put 45-54% of their income into a home loan.
Phil Colton, head of broker sales, BankWest, said: "With mortgage payments taking up a significant portion of household incomes, homebuyers appear to be exercising caution to safeguard against any changes."
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan