A decline in the number of homebuyers choosing fixed interest rate mortgages suggest households are far more influenced by the present state of their budgets than the risk of rising rates.

Major mortgage broker Australian Finance Group (AFG) released data on Wednesday showing the mortgages it wrote in November recorded the lowest proportion at fixed rates in more than five years.

At just 2.1 per cent, it undershot the previous recorded low of 2.5 per cent reached in February, after reaching a high of eight per cent in June in the meantime.

The figures tally with less timely data from the Australian Bureau of Statistics (ABS).

The difference in the circumstances surrounding these low points is notable.
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By Jill Fraser

Speaking to Lending Central about his push to benchmark the cost of banks’ wholesale funding Yellow Brick Road chairman, Mark Bouris said that the four majors’ recent move to increase their fixed rate is a worrying sign.

“That tells you they’re taking the view that cost of funds is going to increase tremendously next year,” he said.

Bouris has been maintaining for some time that an industry benchmark should be introduced to track the cost of banks’ wholesale funding.

Last week NAB Chief Executive Cameron Clyne backed Bouris’ proposal.

Bouris spoke to Lending Central about his concept.

LC: What benefits would be derived from publishing a benchmark funding rate for banks?
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