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...
Investors are not necessarily returning to fixed rate loans, despite uncertainty about rates, according to new loan approval data.
While discount rate home loans dipped across Australia, fixed rate loans remained unexpectedly steady, found Mortgage Choice statistics for February.
This result was unexpected by Mortgage Choice, company spokesperson Belinda Williamson said.
"We were surprised to find that despite lenders raising their home loan interest rates independently of the Reserve Bank during February, and ongoing concern around the direction of interest rates, our borrower data did not show any increased interest in the repayment security offered by fixed rate loans,” Ms Williamson said.
Twenty-one per cent of all new home loan approvals were for fixed rate loans. This is expected with January and the half-yearly average, however remains ahead of the 12 monthly average of 16 per cent.
"The fact that only one in five new loan customers opted for fixed rate loans reflects that there is still a large volume of borrowers willing to ride the variable rate rollercoaster," she said.
Discount rate approvals were reported as having dropped four per cent in February. Demand for basic variable loans rose to 17 per cent, while standard variable loans grew from 15 to 16 per cent.
Interest is the amount of money charged by a lender or financial institution for a loan, which is calculated as the percentage of the principal amount paid over the loan term.