By Mozo · 2 minute read
With the Reserve Banks’ latest move to stay at 2.50%, it looks like the rate-cutting cycle is coming to an end as borrowers flock to lock in low rates through fixed-rate lending products in November. .
Applications for fixed-rate home loans accounted for more than 30% of all home loans issued in November, the highest level in over 5 years. During the same period last year, fixed rate loans accounted for just over 20% of all loans.
Fixed rate demand rose in all states, with Queensland seeing the biggest jump, rising 5% to just under 40% of all loan applications. NSW borrowers weren’t far behind in demand for fixed loans until November.
Variable-rate home loans also fell to an all-time low, accounting for just over 69% of all home loans taken out in November.
With interest rates remaining at very low levels for at least two more months, more and more people are wondering if it’s time to fix the problem.
Although sentiment suggests that the mortgage market has finally bottomed out, Australian interest rates are still relatively high compared to most countries in the developed world.
One clue from lenders that mortgage rates are about to rise is the gradual rise in 3 to 5 year fixed rate mortgages as banks hedge for an expected rise in rates over the medium term.
The general consensus is that rates will rise, but the question is whether they should come down a bit first. Depending on the size of your loan and market conditions, the cost of canceling a fixed rate home loan can run into the thousands of dollars, so fixing is not a decision to be taken lightly.
Borrowers can research and compare the best low fixed rate home loans, but it would also be wise to consider the benefits of partially repairing their home loan, rather than committing the whole thing, just in case rates should drop. .