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Fixed rates lose their appeal
Released 30 March 2011

Homebuyers are starting to shun fixed interest rate loans as interest rate stability and heated competition in the home loan market makes the variable rate option more attractive.   

According to Mortgage Choice, demand for fixed rate loans is at its lowest since October 2010.

The latest data from Australia’s largest independently owned mortgage broker shows 10.7 per cent of the home loans approved for its customers in February had a fixed interest rate. This compares to 15.3 per cent in January, 15.2 per cent in December and 11.2 per cent in November.

“It appears new borrowers were lapping up the newly introduced (variable) deals on offer in February, taking advantage of lenders’ various incentives as they compete to outstrip each other of vital market share,” said Kristy Sheppard, Mortgage Choice spokesperson.

“A move away from fixed interest rates may also signal an uptick in positive consumer sentiment towards the economic outlook.”