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...
A mortgage broking firm has claimed that fixed-rate home loans have fallen during March due to the uncertainty in the housing market caused by the upcoming federal election.
Mortgage Choice’s latest national home loan approval data found a decline in fixed-rate home loans of 1.38 per cent, which make up 21 per cent of all home loans.
Across the states and territories, fixed-rate home loans were the most popular in NSW during the month, making up 26 per cent of all home loans written, followed by Queensland’s 24 per cent.
In comparison, Victorian borrowers only made up 14 per cent of fixed-rate loans taken up during the month.
On a national scale, ongoing discount variable-rate loans were more likely to be taken up by borrowers, making up 35.09 per cent of loans written, followed by basic variable at 22.05 per cent.
Mortgage Choice CEO Susan Mitchell said it was “unsurprising” that borrowers are uncertain about locking in a fixed rate.
“There is a great deal of uncertainty surrounding the housing market at present, which could be weighing against borrowers’ decisions to commit to a fixed term,” Ms Mitchell said.
“The outcome of the upcoming federal election carries potential policy implications that could affect people’s willingness to buy.
“There is also increasing speculation that the RBA will cut the official cash rate in the short term.”
However, Ms Mitchell added that lenders should be aware of the current hesitance to fix rate by borrowers, and as a result have been cutting rates on fixed-rate products.
In fact, borrowers looking to fix rates now could be well positioned for a good deal, Ms Mitchell said.
“The home loan market is fiercely competitive at the moment, and lenders are actively trying to entice high-quality borrowers with attractive interest rates,” she said.
“Major lenders and smaller lenders alike are attempting to lure borrowers to their fixed-rate products by announcing reductions of up to as much as 55 basis points.”
Whether the official interest rate is cut or not later this year, Ms Mitchell said that borrowers make a decision that works both in the short term and long term.
“My advice to borrowers who want to hedge out the risk of interest rate changes would be to speak to their local mortgage broker to learn if fixing all or part of their home loan is the right decision for them,” Ms Mitchell concluded.