Home owners are rushing to lock in their home loans as they fear interest rates will rise further.
Research group Cannex has reported that more than 25% of all residential home loans were now fixed, and says that a shift away from variable home loans is a reflection of uncertainty and nervousness.
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
Cannex financial analyst Mamta Grewal says that 25% is the highest rate for fixed home loans in the six years it has been conducting the research. “There has been a steady increase since September ‘05 when it was about 15% to September ‘06 when it reached about 20%, to now at 25%,” she says.
She says that if the credit crunch gets worse, premiums on fixed rates might rise further. “So people, who want certainty, are trying to get in early and lock in their rates now.”
South Australia has seen the biggest rise, with 35% of all home loans now fixed while only 22% of home loans in Victoria were fixed. NSW was closer to the average at 25%.
“There is high employment in SA, which may explain the high fixed rates there,” Grewal says.