Demand for fixed rate home loans reached a six-month high in October as borrowers locked in low interest rates for an average of three years, according to the latest loan approval figures from Mortgage Choice.
In October, 22 per cent of all new home loans taken out by new borrowers were for fixed rates, which is just above the 12-month average of 21 per cent.
Mortgage Choice spokesperson Belinda Williamson said it comes as no surprise that borrowers are taking advantage of the good fixed rate loan offers, following speculation last month of fewer rate cuts to come this year.
"By securing their interest rate they are also locking in peace of mind over the next few years,” Ms Williamson said.
“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.
“Further analysis shows that by far the most popular fixed rate loan term is three years, at 74 per cent of new loans taken out in October. This is followed by two-year fixed rate term loans at 16 per cent of new loans, and five and one year-fixed rate terms at 5 per cent of approved loans, respectively,” she said.
October also saw a considerable uplift in the preference for ongoing discount rates loans, reaching 40 per cent of all new loans approved. This follows two consecutive monthly drops in demand in August and September.