Despite banks dropping their fixed-rates for home loans to below 5 per cent for five years, only 24 per cent of new home loan customers took the option in June.
The Mortgage and Finance Association of Australia’s chief executive officer, Phil Naylor, told the Herald Sun that Aussies were hesitant to lock in fixed rate loans despite great deals being on offer.
“Australia just isn’t a fixed-rate loan country,” he said.
“Certainly the USA, UK and even New Zealand is more of a fixed-rate country than Australia is, but it is very rare for fixed rate loans to go beyond five years.”
“Australians have always opted to run with the market.”
While Australia still keeps fixed rate loans to around the five-year mark, countries such as the UK and USA offer fixed-rate loans for up to 30 years.
The downsides to taking up the great fixed rates on offer right now are that you may miss out on further rate falls, or will be charged if you exit the loan early.
Michelle Hutchison from Finder.com also spoke to the Herald Sun, and said it’s different in Australia to overseas where people often lock in a fixed rate for 20 or 30 years.
“Most borrowers in Australia who fix choose a three-year term and longer term fixed rates above this are not popular,” she said.
“Lenders in Australia have generally priced longer term fixed rates very high, making them unattractive to most borrowers.”