The latest housing finance figures show a surge in the number of Australians taking out fixed loans, prompting one property group to issue a warning.
Kevin Young, president of The Property Club, said home lending figures for July 2013 reveal that the number of dwellings financed through fixed loans during 2013 surged by 120 per cent between July 2012 and July 2013.
Mr Young said aggressive marketing campaigns by the banks were partly responsible for the increased uptake in fixed rate loans.
“In response to marketing campaigns from the big banks to fix, the home lending figures show that the number of fixed home loans in Australia began to spike during April of this year, and have remained at around 10,000 every month since that time,” he said.
“At this time, The Property Club is not recommending that members fix rates, as we believe they will drop even further despite these aggressive advertising campaigns from the banks to fix. I am following my own advice and at this time I am not fixing any of my loans, which cover more than 180 properties that I have ownership over.”
Mr Young said investors should keep an eye on the market because it is likely the Reserve Bank (RBA) will drop the official cash rate again soon.
“The RBA is under pressure to drop interest rates to stop Australia’s unemployment rate rising even further, with predictions it will shortly pass the six per cent threshold. The latest job vacancy figures show that job vacancies in the year to August 2013 fell by a massive 20 per cent," he said.
“Fixing interest rates at the wrong time is one of the most common mistakes property investors make, with many investors, for example, fixing their loans last year at rates above six per cent - whereas today they can fix at less than five per cent.”
For advice on what to do if you fixed rates at the wrong time, watch Smart Property Investment’s Inside Word.