The low fixed-rate loans offered by some lenders are enticing a growing number of borrowers to lock their rates in – according to a new report.
The Australian Finance Group Mortgage Index revealed that the proportion of fixed rates rebounded from an all-time low of 3.2% to 5.7% in December 2008 – a rise of 78%. This is the first monthly increase since February 2008 according to the mortgage broker.
The data also showed a marked improvement in mortgage sales with the December figure beating expectations after volume climbed by 11% compared to 12 months ago. AFG attributed the solid increase to the continued robust demand by first homebuyers and strong activity among owners looking to refinance. First-time buyers accounted for 21.2% of all mortgages sold by AFG while 37% of borrowers were refinancing. Investors also got into the action pushing the overall number to 28%, up from 27.6% in the previous month.
Mark Hewitt, general manager and sales operations at AFG, said that while it would be premature to call it a turnaround in the mortgage market based on a single month’s performance, the significance of the December data was encouraging.
"There is a traditional softening in mortgage sales at this time of the year as people enjoy the festive season, but mortgage sales held up more strongly than expected," he said. "We expect to see the number of fixed rate loans increase over the next few months as many mortgage holders move to lock in low rates, and first-time buyers continue to take advantage of the financial incentives available to them."
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