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How the RBA will respond to the changed face of the mortgage market


Home loan borrowers appear to have come to the conclusion that interest rates are unlikely to remain at such rock-bottom levels indefinitely. And that they’d be well advised to lock in these rates while they can.

“The share of fixed rate lending is rising,” report the Commonwealth Bank economists. “Around half of all owner-occupier lending was at fixed rates in April.

“Fixed lending accounted for around 45 per cent of investor lending in the month.”

And, of course, the sharp rise in home prices has been accompanied by a corresponding rise in the size of the average home loan.

“The average loan size has rocketed higher over the past few months”, the Commonwealth Bank economists point out. “Rising dwelling prices mean that buyers generally need to borrow more than before.”

Of course, the growing popularity in fixed rate loans – which traditionally have only made up around 15 per cent of mortgage lending – itself reflects the emergency…

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