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Most of the mortgage industry's key lenders have slashed the interest rate on their fixed rate products. But will these rate reductions result in greater demand for fixed rate mortgages? This month, we asked...
DO YOU EXPECT AN UPSWING IN DEMAND FOR FIXED RATE PRODUCTS?
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DEAN RUSHTON
Loan Market Group
"Fixed rates have traditionally been very unpopular in Australia, with home buyers opting to ride the variable wave. That said, as more lenders trim their fixed rates, and the more these rate cuts are publicised in the Australian press, the more likely home buyers will be to view them as a viable home loan option. The popularity of fixed rates moving forward hinges primarily on what the RBA decides to do with the official cash rate. If rates go up, I would expect to see a lot more fixed rate enquiries."
AARON MILBURN
Bankwest
"Now that all of the majors, and many of the second tier lenders, have lowered their fixed rates, I would expect to see increased borrower enquiry. I would think the recent rate reductions would encourage a lot of borrowers to speak to their broker or lender for more information around fixed rates and whether these products could work for them. We have already seen an increase in borrower enquiry and I expect this to translate into greater demand over time."
JANELLE RAYNER
Barnes Home Loans
I think we will see greater demand for fixed rate mortgages. I'm not a big fan of fixed rate products, because I think they are quite restrictive and don't offer the same amount of flexibility that a variable rate offers. But personal choice aside, variable rates and fixed rates are now almost on parity, which will encourage borrowers to look at fixed rates more favourably.
DANIEL DI COZA
Acceptance Finance
"We don't personally see a lot of demand for fixed rate mortgage products as we mainly deal with investment clients. However, first home buyers and those seeking certainty about their repayments, including those who are sensitive about their monthly cash flow, would be more open to fixed rate mortgage products. I think as variable rates increase, and the gap between variable and fixed narrows, there will be borrowers in the market who may find fixed rate mortgages a more attractive option."
GERARD HANSEN
Auspak
"While a lot of lenders have slashed their fixed rate mortgages, I think it is unlikely that these rate reductions will transfer into more demand for fixed rate products. Most brokers ensure their clients can continue to meet their mortgage repayments even if rates were to increase by two per cent. And as rates are unlikely to go up that much further, most borrowers feel more comfortable staying put in their current mortgage and riding the variable wave."
