Latest NewsMortgage ‘fix-rate’ Fever is HereThursday, 18 August 2016

Homeowners are rushing to lock in their mortgage rates with fixed-rate loan deals, in the fear interest rates have bottomed and will rise.

Mortgage brokers and comparison websites have been inundated with fixed-rate mortgage inquiries in recent weeks - most notably after the Commonwealth Bank raised its variable rate by 0.1 per cent.

That surprise rise last Monday, the first variable rate rise from a major lender since March last year, was followed by a collective raising of bank fixed rates that alarmed many new buyers and homeowners looking to convert to a fixed rate.

For the second consecutive month, broker Mortgage Choice noted a sharp increase in fixed-rate home loan applications in May, a trend that has continued into June.

"It's interesting to see new borrowers locking in rates, despite the fact fixed loans are priced higher than variable loans," Mortgage Choice spokeswoman Kristy Sheppard said.

In just a week, comparative website Help Me Choose had a dramatic turnaround in lines of inquiry that suggest variable mortgages were being shunned.

The website, which receives several thousand hits a day, claimed 50 per cent of all mortgage inquiries focused on fixed-rate products, compared with 15 per cent for variable products.

Less than two months ago, borrowers who shopped around could lock in a three-year fixed interest rate of 4.99 per cent.

Yesterday, the cheapest three-year fixed rate on offer was 5.35 per cent from Satisfac Credit Union. While the lowest variable rate of the major banks remained at 5.74 per cent, their three-year fixed rates have shot out as high as 6.69 per cent.

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