22 September 2010
Fixed rates on home loans rise after 14 weeks of falls
Have borrowers missed the boat?
Australia’s largest independently-owned mortgage broker, Mortgage Choice is informing potential
borrowers and refinancers to be aware fixed interest rates for home loans are starting to rise. In the
past week, three lenders on its panel increased rates on one or more of their fixed rate products.
For the first time in over three months, the company’s weekly interest rate averages for its panel of
24 residential lenders showed a rise in the three-year fixed rate, albeit a small one, to 7.37% from
7.33%. Three years is the most popular fixed term.
The average one-year fixed rate also rose, to 7.03% from 7.02%, while the five-year fixed rate was
steady for the second week at 7.81%. This compares to an average basic variable rate of 7.07%
and standard variable rate of 7.36%, both of which have held steady for two successive weeks.
Mortgage Choice spokesperson Kristy Sheppard said, “This week’s interest rate data from the 24
lenders on our panel shows a rise in the average rate for three-year fixed term home loans - the
most popular type – after 14 consecutive weeks of falls.”
“At 0.4 of a percentage point it’s not a large increase but it is one that leads us to question whether
fixed rates are now on their way up.
“Over the three months previous to this week our panel’s average three-year fixed interest rate had
dropped
by 0.46 percentage points. On a 30-year $300,000
principal and interest loan this
is a
monthly repayment difference of almost $95.
“On the flipside, the largest movement for basic and standard variable interest rate averages over
the past four months has been only 0.2 of a percentage point for both loan types.
“What does this possible trend reversal mean for new borrowers and those thinking of refinancing,
especially now a cash rate rise before the end of the year is looking likely? That depends.
“Choosing between a fixed and a variable home loan is a decision that must be made according to
individual financial circumstances, lifestyle and future needs.
There are pros and cons to each.
Sometimes borrowers ‘hedge their bets’ in a sense by splitting the loan between the two options.
“Regardless, those planning to commit to a new home loan
should always be aware of market
movements, expectations and influences so they can confidently make more informed decisions.”
For further information or to arrange an interview, please contact:
Kristy Sheppard / Belinda Williamson
Mortgage Choice
(02) 8907 0502 / 0407 450 860 / (02) 8907 0472
belinda.williamson@mortgagechoice.com.au
About Mortgage Choice, Australia’s largest independently-owned mortgage broker
Mortgage Choice has a national network of hundreds of franchises and loan consultants supported by Group and
State Offices. They provide guidance on, and choice of, home loans offered by an extensive panel of leading
lenders. Many consultants provide a broader service offering, also helping customers source commercial and
personal loans, asset finance, deposit bonds, and risk and general insurances.
Importantly, Group Office pays franchisees the same commission rate for home loans they write, regardless of the
rate paid by the lender selected by a new customer. It has done so for most of its 18-year history, working in each
customer’s interests to source a solution that suits their individual needs.
Mortgage Choice has no balance sheet or funding risk and consistently delivers strong profits and attractive yields.
It listed on the ASX in 2004 (sign: MOC) and is a member of the Mortgage & Finance Association of Australia
(MFAA).
Recent recognition: 2010, 2009, 2008, 2006 and 2005 MFAA Awards Retail Aggregator/Originator of the Year; No.1
on The Adviser magazine’s 2010 and 2009 Top 25 Brokerages lists; 2010, 2009 and 2008 10 Thousand FEET Top
10 Franchise
list; 2009 and 2008 BRW Fast Franchises
list; 2009 Australian Banking & Finance Awards
Best
Financial Institution Employer; 2009 Great Place to Work® Institute Best Companies to Work For list; 2008 MFAA
Awards Best In Mortgage & Finance Industry.
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