Demand For Fixed Rate Home Loans Skyrocket
If you thought the demand for fixed rate home loans in Australia was skyrocketing already, then brace yourself because it’s going to explode.
The low interest-rate environment and COVID-19 pandemic impacts together have boosted the demand for fixed-rate mortgages.
Back when interest rates were in the 4-5 percent mark or higher, mortgage holders often erred on the side of caution because you just never would know when the rate would increase or perhaps decrease and if you fixed and missed out on an interest rate drop then you missed out.
But can the interest rates currently get any lower?
Yes, they can. This week (Nov 3) the reserve bank made the decision to cut the official interest rate once more – now to the record low of 0.10 percent.
Commonwealth Bank was the first of the big 4 banks to pass on this drop and we’re expecting more to follow.
Speaking of the Commonwealth Bank – the country’s largest housing lender – data shows that roughly 40 percent of its new home loan approvals are currently fixed rate, a figure significantly higher than before.
Currently (13/11/2020) four year fixed rate loans are being offered for as little as 1.89 percent and one, two and three year fixed rate loans offered at a rates at between 1.97- 2.19 percent, well below the standard variable rates which tend to be between 2.54-3.5 percent.
And with the latest RBA interest rate drop and competition between the lenders – these rates could get even lower.
Benefits Of A Fixed Rate Loan
With that all said, is a fixed-rate loan right for you?
A fixed-rate home loan locks your home-loan repayments into an unchangeable interest rate for your chosen period of time, often between two to five years.
Once the period ends, it will revert to the standard variable rate unless you decide to enter another fixed-rate loan contract.
Here are some of the benefits of a fixed rate loan:
- You’ll have certainty over how much your repayments will be for the period you chose to fix for allowing you to organise your budget accordingly.
- You’ll be protected from when the interest rate rises in the future.
- And because of this, you can save big and budget for your other expenses knowing your home loan repayments won’t change for a while.
Talk To A Mortgage Broker in Brisbane
Want to know more about fixed-rate home loans? Contact us on 07 3889 9719 or book an appointment with one of our mortgage brokers in Brisbane now. North Brisbane Home Loans team would be happy to assist you whether the fixed rate home loan is suitable in the current market conditions and, most importantly, for your situation.
Patrick Cranshaw, a Certified Mortgage Professional for over 21 years, founded North Brisbane Home Loans in 2002. His career began with ANZ Bank in New Zealand, where he progressed over 16 years to a Business Banking role in Virginia. After moving to Brisbane in 2000, Patrick led the QLD market for a home loan agency, helped set up the REMAX Real Estate Finance division, and practiced as a broker.
