Mortgage buyers in Australia are turning to fixed-rate loans as they seek refuge from volatile investment markets and banks slashing rates to boost their lending business.
According to a new survey, demand for such mortgages increased last month, coinciding with measures by a number of lenders to scale them back.
The Australian Finance Group revealed that fixed-rate loans comprised 16.6 percent of new home loans last month — the highest since April 2008’s 18.4 percent. In August, fixed-rate loans constituted 9.4 percent of all new loans, an increase from July’s 7.4 percent.
Several lenders have reduced their three-year fixed-rates to below 6.5 percent, with the average rate hitting an all-time low of 5.6 percent during the financial crisis.
Standard variable rate loans typically comprise 60 percent of the Australian market, while discount variable rates make up a large portion of the balance.
Mark Hewitt, Group Sales Manager at Australian Finance, said that “very aggressive competition” occurred among lenders in September, with small lenders moving into the market share of the four major banks.
“The combination of more realistic property prices, attractive financing options, and lack of confidence in the share market seems to be coaxing first-home buyers and investors back into some markets,” said Hewitt.
Although banks managed to keep 80.1 percent of the total mortgage market, it was still lower than the 82 percent seen in August.
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