Home loan customers are considering a fixed interest rate for their mortgage because of the uncertainty over whether lenders will follow the lead of the Reserve Bank of Australia (RBA), a national survey has found.
The Priority Lending poll which asked “Given recent decisions by the RBA and rate changes by lenders are you considering a fixed interest rate?’ found 60 per cent of respondents were looking to lock in.
Priority Lending corporate spokesman Paul Smith said 46 per cent of the 764 online poll respondents said they were definitely considering a fixed rate and 14 per cent said they would possibly fix part of their home loan.
He said 36 per cent of those surveyed said they would not fix while four per cent were unsure.
“The banks acting independently of the RBA and lifting their variable rates has caused quite a bit of concern and confusion among consumers,” he said.
“Home loan customers are uncertain about the direction rates are heading while the RBA has left the cash rate at 4.25 per cent yet the banks increased their variable rates by modest amounts.
“With attractive fixed products still available and the European debt crisis remaining unresolved, some consumers may seek the comfort of locking in their mortgage rate for a few years.”
Mr Smith said borrowers needed to ensure they were locking into a fixed rate for the right reasons, some of which included certainty of repayment and peace of mind rather than as a speculative play on where rates are going to move.
He said a large number of Australians committed to fixed rates just before the global financial crisis in 2008 and then watched as the RBA reduced the cash rate to a near record low of 3.0 per cent.
“A mortgage broker is best placed to offer guidance on the pros and cons of fixed versus variable, or splitting your loan between a fixed and variable product,” he said.
Priority Lending survey results:
Given recent decisions by the RBA and rate changes by lenders are you considering a fixed interest rate?
– Yes – 46%
– Yes, but only part of my loan – 14%
– No – 36%
– Not sure – 4%
Source: Priority Lending