Despite the fact that many of Australia's lenders have cut the interest on their suite of fixed rate home loans, demand for this type of product continues to fall.
According to Mortgage Choice's latest national home loan approval data, fixed rate home loans accounted for 23.89% of all loans written throughout the month of June – down 0.52% on the month prior.
Speaking about the results, Mortgage Choice chief executive officer John Flavell said the Reserve Bank of Australia's decision to cut the cash rate in May was continuing to encourage borrowers into variable rate home loans.
“After the May rate cut, we have seen an increasing number of borrowers flocking to variable rate products,” he said.
“It is clear Australians want to take full advantage of the current low rate environment. And as speculation about another rate cut this year continues to grow, I would expect variable rate demand to strengthen further.”
Mr Flavell said while an increasing number of borrowers were opting for variable rate home loans, many of Australia's lenders were proactively trimming the interest on their suite of fixed rate products.
“In recent weeks, we have seen a number of lenders slash the interest rates across their suite of fixed rate home loans. As a result, these products are now very sharply priced,” he said.
“That said, it is fair to say interest rates are very low across the board. So, regardless of whether a borrower takes out a variable rate or fixed rate mortgage, they can be assured of securing themselves a competitive interest rate.”
Across the country, variable rate demand was highest in Victoria, with this type of product accounting for 86.35% of all home loans written throughout the month.
South Australia was not far behind, with variable rates accounting for 84.00% of all loans written.
Demand for variable rate home loans was lowest in Western Australia, with this type of product making up 73.36% of all loans written.
Of the different variable rates on offer, ongoing discount products continued to prove the most popular with borrowers, with this type of product making up 48.98% of all loans written throughout the month of June.