Back in 2012, a complete 70% of residence loan searches on CANSTAR’s database were for variable price loans. Rapidly-forward to now and that majority has been reversed of the 30,000 people who searched for a property loan on CANSTAR’s database in November, only 45% were for searching for variable. Now, a single-quarter of folks (25%) are seeking for a 5-year fixed rate loan – up from just 8% in 2012. 3 year fixed attracted 16% of searches in November and the remainder was split between 1 and 2 year fixed.
Those proportions are not an anomaly – they have been fairly consistent over the previous 6 months and represent a considerable change in consumer behaviour.
Why? Effectively, mortgage holders are in a fantastic place at the moment – house loan prices are as low as we have ever noticed over the previous twenty years and the great news is that they’re not most likely to rise in the near future. Final week the RBA indicated that there had been no rate increases on the horizon and of course there’s now wide speculation that rates will decrease in the New Year. It’s not excellent news for self-funded retirees, but certainly the forty percent of households that have residence loan debt are in a sweet spot.
Current residence loan prices on CANSTAR’s database are as follows:
Normal Variable | Package Variable | 1 Year Fixed | 2 Year Fixed | 3 Year Fixed | 4 Year Fixed | 5 Year Fixed | |
| Average | 5.37% | 5.02% | 4.79% | 4.87% | 4.97% | 5.20% | 5.24% |
| Minimum | 4.48% | 4.62% | 3.89% | 4.29% | 4.49% | 4.69% | 4.84% |
| Maximum | 6.38% | 5.82% | 5.79% | 5.84% | 5.89% | 6.39% | 6.34% |
Source: CANSTAR residence loans database. Based on a loan size of $ 250,000.
Interestingly, whilst institutions bend more than backwards to compete in terms of bells and whistles, the searches on our database indicate that numerous house purchasers just want a good interest rate. An offset account is the most well-known “extra” that people are looking for on our web site, but even then it’s only twenty-6 percent of searches. A redraw facility is sought out by sixteen percent of men and women twenty-one % of people look for a product that enables added repayments, so a single in 5 are seeking to take benefit of those low rates.
A fixed-price loan isn’t for everybody though. Some issues to be conscious of contain:
- Repaying your fixed loan early could outcome in massive break charges, particularly if prices fall additional. So consider your future plans (e.g. upgrading, refinancing etc.) just before deciding on the term you want to fix for.
- Fixed price loans in general are less featured and lack the flexibility of a variable price item – although CANSTAR has noticed that the new breed of fixed loans are coming out with offset accounts and fewer restrictions regarding the amount of added funds borrowers can channel into the loan.
- Do repair if you want certainty in your repayments
- If unsure then think about fixing element of your mortgage rather than the full amount.
And of course, regardless of whether you choose on fixed or variable, do some on the internet study to prepare a short list of loans that have the appropriate mixture of value and attributes to suit your require.
Residence buyers flocking to fixed
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