More borrowers are being lured by attractive fixed offers, with almost one in every five borrowers locking in a fixed rate, according to one of Australia’s biggest comparison websites finder.com.au.
Over 18 percent of all loans financed in July 2013 were fixed rates, which was among the highest levels recorded (original data from Australian Bureau of Statistics (ABS) crunched by finder.com.au).
What’s more, this proportion of fixed home loans is at the highest levels for the past five years.
At finder.com.au, we’re also seeing this trend with almost double (87 percent) the share of borrowers applying for fixed home loans compared to variable through the site.
There were almost 10,000 fixed home loans financed in July 2013, according to ABS, which was more than double (120 percent) the number of borrowers who fixed in July 2012.
Michelle Hutchison, spokesperson for finder.com.au, said fixed loans are good value but there is always a gamble with choosing to fix or a variable rate.
“Chances are, if you know five people who took out a home loan this year, one of them fixed their rate, which is higher than the past five years.
“Fixed rates are currently good value because they are in line with – and many are lower than – variable home loan rates. Usually, fixed rates are higher so it’s not surprising to see many borrowers securing a fixed rate.
“Fixed loans are still falling – the lowest two-year fixed rate on finder.com.au is 4.49 percent by Newcastle Permanent and they also hold the lowest three-year fixed rate at 4.69 percent. Compared to variable rates, the lowest rate on finder.com.au is currently 4.49 percent by State Custodians.
“It’s a great idea to fix your home loan rate if your financial situation is likely to change in the next few years such as starting a family, which will mean less income from time off work. But if you think variable rates could fall further you may miss out on the savings by locking in your rate. This is the gamble that borrowers take when choosing a fixed or variable rate.”