Demand for fixed rate home loans has plummeted to its lowest level in almost three years.
Fixed rate home loans accounted for 17.4 per cent of all loans written in August, down 1.1 per cent from 18.5 per cent in July, approval data from Mortgage Choice shows.
Mortgage Choice chief executive John Flavell said this is surprising considering the current volatility of the home loan market.
"Generally speaking, when the market is volatile and lenders are moving their rates - as they are doing now - fixed rate demand increases, as borrowers look for security and consistency around their mortgage repayments," he said.
In recent weeks many lenders have increased their interest rates across a suite of investment products yet more borrowers are still choosing variable rate mortgages.
Fixed rate demand was lowest in Victoria, but Western Australia and South Australia weren't far behind, Mr Flavell said.
"With rates sitting at historically low levels, it is fair to say that regardless of whether a borrower chooses a fixed rate or variable rate home loan, they are going to secure a competitive rate," he said.
But Mr Flavell stressed the need for borrowers to do their homework before buying a loan, as the market has become incredibly complex during the past few months.
Many banks have made significant changes to their mortgage policy and pricing following moves by the regulator to limit lenders' growth in investment lending to 10 per cent each year.
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