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The number of borrowers taking out fixed rate mortgages continues to drop despite the increasing threat of further rate hikes.
Statistics from Mortgage Choice showed fixed rate products accounted for 4.56 per cent of new loans approved in September, down from 6.98 per cent in August.
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At the same time, demand for variable rate mortgages increased to 95.44 per cent in September, from 93.02 per cent the month before.
Mortgage Choice said brokers are letting their customers know the pros and cons of both fixed and variable rates and it seems more borrowers are comfortable with leaving their rates variable.
"Demand for fixed rates hasn't reached such a low level since April this year," Mortgage Choice corporate affairs manager Kristy Sheppard said.
"Given the vast majority of fixed loans are priced between 100 and 250 basis points above variable loans, the result is not surprising, despite most borrowers being aware of imminent rate rises."
Smartline’s personal mortgage adviser Kevin Lee said borrowers had missed the boat in terms of fixing rates.
“Since March the banks and other lending institutions have ramped up their fixed rates regularly with the average 3 year rate now between 6.99 per cent and 7.29 per cent and 5 year rates between 7.29 per cent and 7.89 per cent,” Mr Lee said.
“Really, if you wanted a fixed rate, the time to lock in was back in March.”
