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More borrowers are eager to lock in fixed interest rates than this time last year amid record-low interest rates, according to HashChing.
A broker survey by mortgage broking platform HashChing has found that 84 per cent of respondents said that more customers are looking to have their fixed-term interest rates than this time last year.
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The findings have been released during a period when the official cash rate is at record lows and lenders continue to offer low mortgage rates.
However, some lenders have been increasing their fixed rates due to higher funding costs for longer-dated loans and the need to manage pricing changes sustainably.
There has been speculation that the Reserve Bank of Australia (RBA) could increase the official cash rate earlier than 2024 despite it repeatedly stating otherwise.
A recent ANZ/Property Council survey found that 30 per cent of respondents from the property industry are expecting rates to rise over the next 12 months.
However, in its July minutes of the RBA board monetary policy meeting, the central bank reiterated that the conditions required to increase the cash rate would not be met before 2024.
These conditions include actual inflation sustainably hitting the RBA 2 to 3 per cent target and a return to full employment.
Hitting the inflation target will require the labour market to be tight enough to create wage growth that is substantially higher than it was when the RBA held its meeting in early July, the board said.
The RBA is due to announce its cash rate decision for August on Tuesday (3 August).
HashChing’s July national survey of brokers has also found that 71 per cent have a more favourable outlook on the housing market than this time last year.
However, 38 per cent of brokers have seen a drop in activity since the statewide lockdown began while 37 per cent have seen fewer deals and reported more sluggish conditions because of the impact of the coronavirus outbreak.
More than half of all brokers surveyed have reported being in favour of scrapping stamp duty on residential properties and 87 per cent said mortgage brokers are more important than ever given the increased competition from non-bank and alternative lenders.
Commenting on the findings, HashChing chief executive Arun Maharaj said: “Brokers are a great sounding board for consumer sentiment of general economic conditions.
“What we’re seeing is that consumers are looking for certainty in a time of great uncertainty – and that’s why there have been more enquiries about locking in fixed term rates. It’s one area of the home loan process that consumers can control and they’re happy to pay the price for that.”
Making observations about housing market sentiment amid lockdowns, Mr Maharaj said: “While most Australians believe in the underlying strength of the Australian housing market, the uncertainty created by the spread of COVID-19 is creating unease and uncertainty in the market – to the extent that sentiment might be changing, and consumers are taking the opportunity to lock in the historic low rates now on offer across the board.”
[Related: Majority of brokers believe rate is top attraction]
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