Fixed rate demand continues to wane, with the vast majority of borrowers opting for variable rate home loans.
According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 17.40% of all loans written in October. While this was slightly higher than the 16.72% recorded the month prior, it is significantly lower than the 12 month average of 20.83%.
Mortgage Choice chief executive officer John Flavell said the data would suggest that fixed rate home loans have fallen out of favour with borrowers.
“With the Reserve Bank of Australia clearly indicating that rate hikes are a long way off, I'm not surprised to see more people opting for variable rate mortgages,” he said.
“Borrowers are savvy, they understand that interest rates are more likely to fall than rise over the short to medium term. As such, they feel comfortable opting for a variable over a fixed rate mortgage.
Across the country, fixed rate demand was lowest in Victoria, with this type of product accounting for just 5.88% of all loans written throughout the month of October.
“If we look at the historical data we can see that the level of fixed rate demand in Victoria is the lowest it has ever been,” Mr Flavell said.
“Meanwhile, Queensland is currently enjoying quite strong fixed rate demand by historical standards. As per the data, fixed rate mortgages accounted for 23.80% of all loans written within the state last month – slightly higher than the 19.89% recorded the month prior.”
Demand for fixed rate products was also strong in New South Wales, with this type of home loan accounting for 19.62% of all loans written.
Of all of the loan products on offer across the country, ongoing discount products proved the most popular with borrowers, with this type of home loan accounting for 45.66% of all loans written.