Westpac forecasts higher interests rates: Borrowers warned to brace for higher repayments
Monthly repayments could soon cost borrowers a lot more cash if Westpac’s predictions for rate rises do come to fruit...
Property buyers turned towards fixed rate loans over October, as statistics show this form of finance reached a six-month high, according to new figures from Mortgage Choice.
Over October, 22 per cent of new home loans were for fixed rates, above the 12 month average of 21 per cent.
Forty per cent of all new loans approved were for ongoing discount rate loans, while standard variable rate loans fell from 18 per cent to 15 per cent. Basic variables remained steady at 19 per cent.
Company spokesperson, Belinda Williamson said that this upturn in fixed rate loans may be a result speculation that fewer rate cuts will be seen over the remainder of the year, as well as the latest CPI data “hinting at less rate activity”.
“Despite the increased demand for fixed rate loans, lenders are still discounting their rates to attract new customers. Over the past week, we have seen seven lenders on our lender panel drop their fixed rate loans across a range of fixed rate terms,” said Ms Williamson.
The most popular fixed rate loan term is three years (74 per cent of new loans in October), followed by two years (16 per cent), while five and one year terms were the least popular (five per cent).
“There was a downward trend on the popularity of discount rates loans – where the loan is discounted over the entire loan term – in the months before October, as economists were predicting a number of rate cuts by the Reserve Bank before the end of the year,” said Ms Williamson.
“This month appeared to buck this trend however, as we saw an increase in ongoing discount rate loan appeal. As the talk of further rate cuts dries up, this increase shows more borrowers are now shopping around for long-term bargains.”