Home owners rush to fix loans as RBA signals the end of rate cuts

Thursday August 6, 2009

Aussie Home Loans has recorded a dramatic rise in the number of customers looking to fix rates as the Reserve Bank of Australia has indicated any future interest rate moves could be upwards.

Of those customers contacting Aussie’s call centre in July to discuss their home loan options, just 15 per cent of them decided to follow through and fix their mortgage. In the first week of August, call volumes are already much higher and 53 per cent of customers who have inquired about fixed rates have moved their mortgage across from variable.

On Tuesday, the RBA announced the official cash rate would remain unchanged at 3.0 per cent, but Reserve Bank Governor Glenn Stevens noted economic conditions in Australia are stronger than expected a few months ago, with consumer spending and exports “notable for their resilience” while “measures of confidence have recovered a good deal of ground.”

Governor Stevens indicated the bank would continue to monitor inflation in the coming months, which could lead to an interest rate rise before the end of the year.

Aussie CEO Stephen Porges said the public’s appetite for fixed loans has increased given the commentary surrounding any potential interest rate moves.

“It is now looking more likely that the next interest rate move the RBA makes will be upwards,” Mr Porges said. “Confidence has returned following a sharemarket rally and better than expected figures in retail spending and unemployment.”

“The RBA will endeavour to keep a cap on inflation and the way they do that is by raising interest rates.”

Mr Porges said research has shown that customers are financially better off over time with a variable rate. However, a fixed rate can be an effective way home owners can keep their repayments at the same level and effectively manage their risk.

“Fixing part of a mortgage while keeping the remainder variable can be a good each-way bet,” Mr Porges said. “Home owners can feel comfortable with a set repayment amount on the fixed portion, but can take advantage of the low variable rates to make extra repayments and hopefully pay their homes off sooner.”

As one of the country’s largest non-bank providers of financial services, Aussie has a loan book of over $30 billion. With the acquisition of Wizard, there are now over 140 retail stores and 800 brokers across the country ready to help customers get a better deal on their finances.

An Aussie broker will offer guidance, assess eligibility, lodge the application and then support the first home buyer borrower through the home loan process. Aussie brokers are available 24 hours a day, seven days a week, in all capital cities and regional centres at the request of customers who call Aussie on 13 13 33.

For more information or to request an interview with Stephen Porges:
Tim Allerton
City Public Relations
(02) 9267 4511

Brooke Stoddart
Aussie Home Loans
0438 677 588

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