Home buyers `not fleeing to fixed rates`

Home owners are not being panicked into switching to fixed rate loans, despite the
nation's largest home lender recently raising its standard variable mortgage rate, a
broker says.
Earlier this month, the Commonwealth Bank of Australia raised its variable rate by
10 basis points, blaming higher funding costs.
Loan Group executive director John Kolenda said the company's brokers had received
few inquiries about fixed rates despite the increase.
"The lack of demand to switch to fixed rates indicated the majority of home owners
believed they would be better off sticking to variable rates while the economy
remained in decline," Mr Kolenda said.
He said most economists thought the Reserve Bank of Australia (RBA) was more likely
to reduce the official cash rate below the current level of 3.0 per cent over the
next 12 months due to rising unemployment.
He said home owners were enjoying variable rates of about five per cent, the lowest
in almost 50 years.
"The opportunity to lock in a long-term fixed rate in the low five per cent range
has probably passed as the major banks have already significantly increased their
fixed rates," he said.
Mr Kolenda said people may also be wary of locking into fixed rates as many mortgage
holders were caught out switching from variable rates prior to the economic
downturn.
According to the Australian Bureau of Statistics, more than 125,000 people locked
into fixed rates of more than eight per cent in the 12 months to August 2008.
"Those people then watched as the RBA reduced the cash rate by more than four per
cent in response to the global financial crisis," he said.