Due to lower interest rates following several rate cuts late in 2008, an increasing number of people are choosing fixed rate home loans. In November, figures from Australian Finance Group (AFG) showed record lows, with just 3.2 per cent of all home loans signed up as fixed rate. However, new figures out this week show that in December, as rates fell once again, people were more likely to fix their rate with 5.7% of all home loans at fixed rates.
Mark Hewitt is the general manager of sales and operations at AFG. and he believes that these figures are encouraging.
“It would be premature to call a turnaround in the mortgage market based on a single month’s performance, but December figures were an encouraging sign. There is a traditional softening in mortgages at this time of year as people enjoy the festive season, but mortgage sales held up more strongly than expected.” Mr Hewitt said.
Increased demand from first home buyers helped boost the property market in December, as the boost to the first home buyer grant and lower interest rates kicked in. Home owners refinancing their property also contributed to a stronger than expected December for mortgage sales.
When interest rates were at their highest during early to mid 2008 many people fixed their rate fearing they would go even higher. According to figures from the Bureau of Statistics, 43,632 borrowers took out new fixed home loans between March and September. Now rates are low again, many want to fix their rate to protect themselves if rates rise again.
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