Home' The Monaro Post : The Monaro Post Newspaper - November 22, 2017 Contents THE MONARO
PROPERTY MUSTER FOR SALE
Wednesday November 22, 2017
One in four borrowers are locking into a fixed rate mortgage
Ongoing rate movements in the mortgage market has helped
demand for fixed rate home loans to hover at record highs,
new data has revealed.
The latest national home loan approval data from Mortgage
Choice found fixed rate home loans accounted for 28.23% of
all mortgages written throughout October.
“We have seen very little change in demand for fixed rate
home loans over the last couple of months. In September,
fixed rate loans accounted for 28.33% of all home loans
written – which was largely the same as what we saw this
month,” Mortgage Choice chief executive officer John Flavell
“Over the past four months, fixed rate demand has
consistently sat above 28%. The last time we saw this level of
consistent fixed rate demand was back in early 2013.
Mr Flavell said this prolonged period of heightened demand
for fixed rate products was largely expected at this time.
“Over the last few months, it has become increasingly clear
that the cash rate could rise in the not too distant future,” he
“Indeed, market conversations around home loan interest
rates have changed from ‘if rates rise’, to ‘when rates rise’.
“Borrowers are acutely aware that a rise in the official
cash rate is now largely inevitable and, subsequently, are
increasingly opting for certainty and security around their
In addition to increasing speculation about future interest
rate hikes, Mr Flavell said pricing competition between
Australia’s lenders has started to heat up in the fixed rate
space, which is ultimately encouraging more borrowers to
look at this type of product.
“We continue to see Australia’s lenders adjust the interest
rates on their fixed rate products for both investors and
owner-occupiers,” he said.
“Some have slashed the interest rates on their fixed rate
products by as much as 20 basis points in recent weeks.
This would no doubt influence some borrowers’ home loan
Across the country, New South Wales had the highest level
of fixed rate demand, with this type of product accounting for
32.32% of all loans written throughout September, up from
28.07% the month before.
This was followed by Queensland, where fixed rate loans
accounted for 31.70% of all loans written, and Western
Australia, where fixed rate loans accounted for 26.37% of all
Overall, variable rates continue to be the most popular
home loan product across Australia, with 71.77% of
borrowers opting for this type of mortgage.
Mr Flavell said with various lenders competing for business
and offering sharp rates on their home loan products, both
fixed and variable, now was a good time to take out a new
loan or refinance.
“New and existing borrowers have no shortage of choice
when it comes to selecting a home loan. That said, borrowers
should speak to a mortgage broker who can advise on the
best product for their needs,” he said.
RBA makes safe bet, leaves cash rate on hold
While most of the nation was preoccupied
with the events taking place at Flemington
Racecourse, the Reserve Bank of Australia
still met to discuss the monetary policy
In an unsurprising move, the Board opted
to leave the cash rate on hold once again.
Today’s decision marks the 15th
consecutive month that the Reserve Bank
has left the official cash rate on hold at the
historically low setting of 1.5%.
officer John Flavell labelled the decision
‘unsurprising’ and a ‘safe bet’.
“The latest data would suggest the
Australian economy is performing relatively
well at the moment,” he said.
“Property price growth has started to slow
across some markets, which is largely in
line with expectations. At the same time, we
are starting to see signs of improvement in
consumer sentiment and business conditions,
while unemployment remains low by historical
According to the latest data from
CoreLogic, there was no increase in property
values across the combined capital cities over
the month of October.
In fact, median dwelling values actually fell
in Sydney, Darwin and Canberra last month.
In Australia’s largest city,
property prices slid 0.5% over
the course of October, taking
Sydney’s median dwelling value
Mr Flavell said this stagnation
in property price growth has
been foreseen for ‘some time’.
“Over the last 12 months,
we have seen a significant
shift in lending policy. For
some borrowers, specifically
international investors, it has
become harder than ever to
qualify for a home loan and
this has, understandably, had
an impact on property demand
and, in turn, property price
growth,” he said.
“I think the Reserve Bank
would be buoyed by the fact
that property price growth
has started to slow. When you combine the
sluggish property price growth result with
the fact that optimists have, for the first time
since November 2016, started to outnumber
pessimists, then it is fair to assume that the
Reserve Bank’s prolong period of interest rate
stability is having the desired effect on the
“In addition to a lift in consumer optimism,
we have seen an uptick in employment, with
the unemployment rate now sitting at 5.5%,
which is effectively full employment.”
Of course, while the Reserve Bank has
once again chosen to leave the cash rate on
hold, that doesn’t mean home loan interest
rates will remain fixed at their current levels.
“We have seen so much movement in
interest rates across the mortgage market
in recent months and I do not expect this to
change any time soon,” Mr Flavell said.
“In recent weeks, we have started to see
some lenders adjust their fixed rate pricing
and make further changes to their interest
only pricing and policy.”
Regardless of a person’s individual
circumstances, Mr Flavell said now was the
right time for people to review their financial
situation and make sure they are in the right
product for their needs.
“It is a complex market so it is important
for buyers and borrowers to speak to a local
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