Demand for fixed rate loans doubled over the past year, peaking in November and reaching its highest level since April 2008, national loan approval data from Mortgage Choice has revealed.
This type of loan accounted for 20% of all new loan approvals during November, up on the six-month average of 16%, the 12-month average of 14% and this period last year when only 11% of new loans were fixed rate loans.
Ongoing discount rate home loans rose marginally, from 43% to 45% of home loans among new borrowers in November – and well ahead of the 12-month average of 33%.
Company spokesperson Belinda Williamson said, “When comparing our November loan approval data to one year ago, it is evident fixed rate loans have become far more popular.”
“There has been a lot of rate movement in fixed rate loans in recent weeks and months. We've seen some fixed rate loan products almost a whole percentage point lower than lenders' variable rates.
“Demand for ongoing discount loans has risen steadily, with this type of loan representing 45% of all home loans in November, compared with 43% six months ago and 33% a year earlier.
“Snapping up relatively low fixed rates and attractive variable rate discounts, borrowers are certainly making the most of lenders' pricing war as they battle each other for business.”
Variable rate home loans accounted for 80% of all loan approvals this month, on par with the previous month and lower than the 12-month average of 86%.
Standard variable loan demand rose to 17% of approvals in November from 15% in October, below the 12-month average of 24%. Demand for basic variable loans fell to 14% in November from 16% in October, down on the 12-month average of 21%, and interest in line of credit loans and introductory rate loans fell slightly to 4% and 1% respectively.
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