Homeowners who have been stung by the recent rate hikes are scrambling to fix their mortgage over worries that November's rate rise will not be the last, according to a new report by mortgage broker AFG.
The AFG Mortgage Index for November found that one in four borrowers are choosing fixed rate mortgages, the highest level recorded by the firm for this type of loan.
Malcolm Watkins, AFG executive director, said that the surge in the number of borrowers opting for fixed term mortgages shows that homeowners believe there are more rate rises to come. "People do not lock in fixed rate mortgages if they believe that rates have peaked," said Watkins. "The relatively high proportion of buyers going fixed rate is not so much a reaction to the November rate rise as a signal of concern that rates may very will be going up again."
With demand for fixed term loans expected to grow even further, the Commonwealth Bank of Australia recently slashed rates on its 5-year fixed term loans by 25 basis points to 7.14% p.a. Customers choosing a fixed rate loan as a part of the bank's professional package are also entitled to a further 0.15% discount, effective 5th December.