Latest NewsFixed Rate Mortgage Demand at Record LowThursday, 24 November 2016

Demand for fixed rate mortgages dropped to a record low in December, a survey reveals.

Just over one per cent of Mortgage Choice's new home loan approvals were for fixed loans in December, a company survey released on Wednesday shows.

It is the lowest since the mortgage broker began recording such data in January 2003.

Mortgage Choice senior corporate affairs manager Kristy Sheppard said Australians taking out home loans were looking at the cost of fixing their interest rate and deciding that at the moment it's not worth the extra expense.

"When you look at the comparative cost between fixed and floating rates, its not at all surprising that almost 99 per cent of our new residential borrowers are choosing variable home loans," Ms Sheppard said.

"Our lender panels average basic variable interest rate is around one and a half percentage points lower than for the average three-year fixed rate loan, the most popular fixed loan."

The current extra cost equated to $286 per month extra in repayments for a 25-year, $300,000 loan at 7.7 per cent versus a 6.2 per cent variable rate.

"It appears most new borrowers are looking at the difference between the two loan types and thinking they feel more comfortable paying less and riding the variable rate rollercoaster, despite the almost-certain rate rises coming up this year," he said.

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