October 06, 2011
As the take up of previously popular basic variable and standard variable home loans falls further, that of cut-rate variable and fixed term loans continues along a path of significant growth.
Discount rate mortgages, where the variable rate is reduced over the loan term usually in return for an annual fee, accounted for nearly half of September's approvals for Mortgage Choice, Australia's largest independently-owned mortgage broker.
Fixed rates also experienced increased borrower appetite, though to only 17% of approvals.
Company spokesperson Kristy Sheppard said, "The real growth story at the moment is ongoing discount rates. In September 2011, this product as a proportion of all Mortgage Choice's new home loan approvals rose for the tenth successive month, to a high of 45%."
"Australia has almost reached the point where one in two new borrowers is seeking the combined benefit of affordability and flexibility above and beyond any other loan type advantages.
"I expect the trend to continue, bolstered by industry talk swinging away from cash rate hikes to ongoing stability or cuts.
"Many more consumers than not are willing to ride the variable rate rollercoaster at this point, especially if they feel they've snagged a bargain."
Demand for standard variable and basic variable rate home loans fell in September, to 16% and 15% of approvals, as did that for introductory rate loans, to 2%. Line of credit experienced a slight growth in demand, to 5%.
Note: Mortgage Choice currently writes one in 25 new home loans in Australia, equating to approx. $10 billion in approvals per year, hence it provides a clear insight into borrower preferences. The 19 year old mortgage broker has a loan book of over $42 billion.
Mortgage Choice Corporate Affairs
(02) 8907 0472 / 0407 416 124