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ISCOVER
Staff Reporter
Enquiries for fixed interest rate mortgages have flat-lined since the Reserve Bank of Australia lowered the official cash rate to 3.5 per cent, new data has revealed.
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According to Loan Market Group, customer enquiries for fixed rate mortgages had fallen to around 15 per cent of total home loan enquiries – down from 30 per cent earlier this year.
“The demand for fixed rate products has fallen as variables rates have basically intersected with fixed rates,” Loan Market spokesperson Paul Smith said.
“Fixed rate products had spent the majority of 2012 around a full percentage point below variable rates, however with a downward outlook on rates, lenders aren’t shifting fixed rates parallel to variable rates.
“The feedback from consumers shunning fixed rates is that they’re convinced home loan rates have further to drop and that they’re anticipating a period of prolonged low interest rates.”
Mr Smith said the ongoing economic uncertainty in Europe would ensure it would be some time before there was any prospect of interest rates going up.
“Economic conditions outside Australia are expected to influence the RBA to further reduce the cash rate, however with two recent significant rate reductions as well as a bevy of daily mixed messages from Europe, it appears the RBA will be observing the impact of these before making another rate reduction,” he said.
