Fixed Rate Mortgage Boom – MacroBusiness


The latest ABC internal lending data shows a record boom in fixed rate mortgages.

As the following chart shows, new home loans increased 50% year-on-year in April despite falling during the month:

Record annual growth in new mortgages.

The average loan amount has skyrocketed in recent months. Rising house prices mean buyers typically have to borrow more than before:

Average amount of ABC loans

Massive increase in the average loan amount.

The share of fixed rate mortgages also hit an all-time high among both homeowners and investors, accounting for around 45% of loans to investors during the month:

CBA fixed rate loan

Save fixed rate mortgages.

However, fixed rate mortgages have moved to two-year rates, reflecting that they are now cheaper than four-year rates:

ABC Fixed Rate Mortgages

Switch to two-year fixed rates.

Finally, loans for changes and additions remain very important, reflecting the fact that Australians cannot travel abroad and instead prioritize spending for the home:

ABC loan for renovations

Home improvement loans are also on the rise.

For the same reason, loans for household goods and cars have also experienced a strong upward trend:

ABC consumer credit

Loans on major household items tend to increase.

The global shift to mortgages makes sense given the massive drop in fixed mortgage rates:

Australian mortgage rates

Australian mortgage rates have fallen sharply.

The Reserve Bank’s decision to end the Term Finance Facility (TFF) in June will obviously raise fixed mortgage rates going forward and should bring demand for mortgages back to variable rates.

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