Demand for fixed rate home loans has surprisingly slumped. Picture: realestate.com.au

Mortgage Choice’s latest national home loan approval data showed that fixed rate home loans made up 20.89 per cent of all loans written during March, which was down from 22.22 per cent in February.

Demand for fixed rate home loans has surprisingly slumped. Picture: realestate.com.auSource:Supplied

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Mortgage Choice chief executive officer John Flavell said he found the data surprising, considering the moves made by the banking sector during the past few weeks.

“Over the past few weeks, many of Australia’s lenders have increased their variable home loan interest rates,” Mr Flavell said.

“While some lenders increased their variable rates by as little as three basis points, others were quick to increase their variable rates by over 20 basis points across some of their products.

“Given that home loan interest rates are rising, I am somewhat surprised to see a fall in fixed rate demand.”

Mr Flavell said there was no doubt that interest rates would keep rising, at least in the immediate future.

“When this happens, I think we will see more borrowers looking for interest rate stability and security,” he said.

Mortgage Choice chief executive John Flavell.Source:Supplied

Queenslanders were the keenest on fixed rates, with 24.74 per cent of all March loans being locked in, while New South Wales’ share was 23.23 per cent.

Borrowers should remember to keep future interest rate rises in perspective, with variable rates still at historic lows and finance still very affordable, Mr Flavell said.

The March variable rate hikes by the big four banks signified that the cycle of falling rates had finally come to an end after a downward trend stretching seven years.

Locking in rates could give borrowers certainty around their housing dream.Source:Supplied

Canstar chief finance expert Steve Mickenbecker told Moneysaver HQ that he could not image fixed or variable rates being reduced any time in the near future.

“Once the rates start to go up, it takes years for them to come down again,” he said.

At a glance:

— Fixed rate demand fell from 22.22 per cent in February to 20.89 per cent in March

— All four major banks have raised interest rates independently of the RBA

— The official RBA cash rate has trended downwards since 2010

— Qld led the fixed rate demand at 24.74 per cent

— NSW was next with 23.23 per cent

— Experts still expect fixed rate demand to rise

Originally published as Fixed home loan rate shock