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Demand for fixed-rate home loans fell sharply in January but remains well above the long-term average, according to new home loan approval figures from Mortgage Choice.
The approvals data shows fixed-rate loans accounted for 27.43 per cent of all loans written in January, and while down from 33.06 per cent in December, demand remains well above the 10-year average of 17.63 per cent.
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The demand for fixed-rate products is expected to remain strong, especially as more lenders sharpen their rates in this area, according to Mortgage Choice spokesperson Jessica Darnbrough.
“All of Australia's lenders are competing very aggressively on price within the fixed-rate arena, and while this is happening more borrowers will opt to fix their mortgage,” she said.
January saw a wave of lenders, including major banks NAB and Westpac, drop rates on fixed-rate products as competition in the mortgage market heated up.
NAB Broker's general manager, distribution, Steve Kane told The Adviser that recent fixed-rate rate reductions are a result of the current competitive environment.
“I think that is being driven wholly and solely by competition in the marketplace, which is fantastic for the customers of our broker partners,” he said.
Ms Darnbrough said borrowers are increasingly flocking to the safety of fixed-rate home loans since it provides them with certainty around their mortgage repayments.
"In the current economic environment, and with the Reserve Bank keeping its cards close to its chest, it is not surprising to see a large percentage of borrowers opting for the safety of a fixed-rate home loan," she said.
