HOME owners are showing little interest in switching to fixed interest rate mortgages despite the varying outlooks of the Reserve Bank of Australia (RBA) regarding the official cash rate, says leading mortgage broker Loan Market.
Loan Market Chief Operating Officer Dean Rushton said there's now growing sentiment in the marketplace that rates will not be on the rise next month.
Additionally, the company has not experienced any increase in enquiries for fixed rates.
“With wage growth slowing to 0.8 per cent in the first three months of the year, consumer sentiment falling by 1.3 per cent and housing approval numbers at a 10 year low in March, the pressure is off the RBA to raise the cash rate in June,” Mr Rushton said.
“Consumers are not convinced rates are on the rise and there doesn't appear to be any rush to fix loan rates.
“While consumers are craving stability as they also battle with higher cost of living demands, they realise that locking in a fixed rate can be a risky hedge.
The significant swings in rates three years ago are still fresh in many people's minds.”
Mr Rushton said more than 100,000 Australians committed to fixed rates of more than eight per cent just before the global financial crisis.
“These borrowers missed out on the big reductions in interest rates introduced by the RBA in response to the GFC and many of them are only just coming off those fixed rates,” he said.
“There was much speculation about fixing rates at that time, and unfortunately many consumers had to sit on the sidelines and watch rates dramatically drop in the span of several months.
“Even though the cash rate is likely to stay at 4.75 per cent next month, we're still well below the level the RBA had taken it during 2007/2008.”
Mr Rushton said Loan Market has experienced a jump in enquiries from borrowers coming off fixed rates now looking to refinance.
“Enquiries for borrowers wanting to move out of their fixed rates have jumped nearly 30 per cent this year,” he said.
“These are almost all borrowers stuck on a high fixed rate from 2008.”
He said a mortgage broker was best placed to offer advice on issues such fixing your interest rate, or taking a rate that's partially fixed and variable.
“A mortgage broker can assess a borrower's personal circumstances and provide the best advice on what is on offer out there in what is still a highly competitive lending market,” he said.
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