Uncertainties about the direction of interest rates prompted more borrowers to take a record number of fixed rate loans, according to a new report.
Mortgage Choice national housing loan approval data showed that fixed rate home loans accounted to about 34% of all approvals in April, a reversal of the trend seen in the previous months of the flexibility of variable rate loans being favoured more by borrowers.
The April result was higher than the monthly average of 31% and much lower than Queensland, where fixed rate loans accounted for almost half (44%) of all loans taken in the same month.
Warren O'Rourke, national corporate affairs manager, Mortgage Choice, said: "With some lenders moving their three-year fixed rates up anywhere from 5 to 25 basis points during the month and, with the uncertainty about the direction of official interest rates, borrowers sought the certainty that fixed rate mortgages can provide in terms of repayment stability."
Demand for standard variable loans remained solid, taking about 30% of all loans, thanks to aggressive rate cuts by lenders. Approvals for basic variable home loans fell slightly to 24% from 26% in March. Line of Credit loan approvals rose slightly to 11.70% in April.
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