Demand for fixed-rate home loans fell in March, accounting for 21% of all home loans written – down 1.38% from the previous month, according to new data from Mortgage Choice.

Borrowers taking a tentative approach towards fixing their interest rate is not surprising, according to Mortgage Choice Chief Executive Officer Susan Mitchell.

“There is a great deal of uncertainty surrounding the housing market at present, which could be weighing against borrowers’ decisions to commit to a fixed term. The outcome of the upcoming Federal election carries potential policy implications that could affect people’s willingness to buy. There is also increasing speculation that the RBA will cut the official cash rate in the short-term,” she said. “That being said, lenders would be acutely aware of borrowers’ reluctance to fix, and have in the last few weeks responded by cutting rates on some of their fixed rate products.”

Mitchell said that there are currently great rates for Aussies planning to fix. Major lenders and smaller lenders are attracting borrowers to their fixed-rate products by announcing reductions of up to 55 basis points.

Across the country, New South Wales recorded the highest fixed-rate demand, with this type of product accounting for almost 26% of all home loans written throughout March.

Queensland followed, with fixed-rate demand accounting for 24% of all home loans.

Borrowers in Victoria were the least likely to fix their interest rate, with 14% choosing this type of product in March.

The most popular home loan product among borrowers was ongoing discount variable rate loans, followed by basic variable rate loans.

“The home loan market is fiercely competitive at the moment, and lenders are actively trying to entice high quality borrowers with attractive interest rates,” said Mitchell.