Drop in demand for fixed rate home loans

Drop in demand for fixed rate home loans

Demand for fixed rate home loans continues to drop in Australia, with a key mortgage provider quoting figures as low as 3.88% in October. This kind of drop hasn’t been seen since 2011.

The big question is, of course, what does this mean for borrowers?

The impact on borrowers in Australia

Although major lenders have made the move to lift variable rates recently, most rate increases won’t hit the market until 20 November. We may see interest in fixed rate home loans improve after this time, as buyers are likely to find variable rates less attractive.

All in all, the home loan market is a very competitive place for residential borrowers looking to secure a new home loan or refinance an existing one.

This table offers an overview of some of the variable rate increases expected from November 20. (Source: AFG)


State by State

Victoria has had the least demand of all the states, with fixed rate home loans accounting for only 8.65% of loans written in the month of October.

Queensland and South Australia were close contenders, with demand hitting 12.76% and 12.36%. While fixed rate home loans made up 17.36% of all loans written in NSW.

Discounted variable rates popular

Most borrowers are opting for discounted variable rate home loans, with more than 50% of home loans in October taking this form.

There’s a very healthy level of competition between lenders, and at Capita, we certainly see a trend towards non-major lenders, who are now more able to compete with the majors.

What can I do?

If you’re concerned about scheduled increases in variable home loan rates, contact a Capita mortgage broker to discuss what the right option is for you. We take the time to understand your home loan goals, and then provide tailored solutions that help you to achieve them.

Contact Capita Finance Solutions today.