Fixed interest home loans gain popularity
One in three people looking to take out a home loan or refinance their home in the next six months say they will opt for a fixed interest rate, a new survey has found.
The survey, by the Mortgage and Finance Association of Australia (MFAA) and BankWest, found that although borrowers tolerated last November’s interest rate rise “reasonably well”, nearly half of borrowers say they would struggle with another increase.
“According to our stats, about 39.3 per cent of people will be uncomfortable or very uncomfortable with another 0.25 per cent rate rise,” MFAA chief executive Phil Naylor said.
The survey also found that the number of prospective borrowers and refinancers who plan to take out a fixed interest rate loan has risen 4.1 per cent in the past six months to 32.4 per cent.
The number seeking a variable rate has dropped significantly, from 17.3 per cent a year ago to just 7.6 per cent today.
However, BankWest head of mortgages and savings Paul Vivian said the survey also found the number of borrowers who had refinanced their home loans in the past year was down 5.6 per cent to 20.9 per cent.
Naylor said that, given the currently tumultuous market conditions, he was not surprised more people favoured fixed interest.
“The results from the survey are distinct indications of the instability and uncertainty of the market at the moment.”
Naylor said concerns about future interest rate rises were also likely contributors to fixed interest’s surge in popularity.
However, he cautioned that interest rates were not the only thing to consider when taking out a home loan, adding that service, fees and terms and conditions should also be taken into account.
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