Growth of fixed-term mortgages continued through August, reaching almost 55% of all home loans

Growth of fixed-term mortgages continued through August, reaching almost 55% of all home loans

Fixed-term mortgages continue to gain in popularity with 54.9% of all home loans by value fixed at the end of August, up from 53.9% a month earlier.

Reserve Bank data also shows borrowers continuing to move away from floating, or variable, home loans with these down to 45% in August from 46% at the end of July.

By dollar value, a total of $102.692 billion of mortgages were fixed at the end of August, versus $84.145 billion floating. A total of $116 million worth of the $186.953 billion overall total was unallocated.

Month-on-month, the growth in fixed-term mortgages was $2.416 billion, or 2.4%, and the drop in floating mortgages was $1.416 billion, or 1.7%.

The move to fixed mortgages has been a consistent theme over recent months with the dollar value of fixed mortgages passing through 50% of the total in May this year.

The Reserve Bank started tracking fixed versus floating residential mortgage data in 1998. April 2012 marked the floating high point, with 63% of the dollar value then floating. The high point for fixed mortgages was August 2007 when they comprised almost 87.5% of the total.

 The surge back to fixed-term mortgages means if the Reserve Bank raises the Official Cash Rate from its record low of 2.5% any time soon, feed through to the mortgage belt could take time to gain momentum. That said, $52.9 billion, or 51.6%, of  fixed mortgages are fixed for less than a year.

This article was first published in our email for paid subscribers. See here for more details and to subscribe.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

2 Comments

Comment Filter

Highlight new comments in the last hr(s).

More than half on 6 or 12month terms - which is really the new 'floating'.
As banks refuse to pass on floating reductions.
Noone seems to be worried about future rate rises ... take the savings now...

Fix for a year and save a very few bucks.  What is the point? Even five years fixed is not going to help much when the tide turns.  You will drown unless you have enough cashflow to cope.  Or enoughcashflow to get rid of debt quickly. If you mortgage payments leave you no room to move. You are screwed for surre.