March 03, 2016
Despite a small drop in demand, fixed rate mortgages still accounted for more than one in every five home loans written by Mortgage Choice in February.
According to the company's latest national home loan approval data, fixed rate home loans accounted for 22.28% of all loans written throughout the month of February – just 1.34% down from the 23.62% recorded the month prior.
Mortgage Choice chief executive officer John Flavell said while fixed rates saw a small drop in demand throughout February, they continue to prove a popular home loan product choice for many Australians.
“We are still seeing quite a bit of volatility in the interest rate market, causing many borrowers to opt for the security of a fixed rate home loan,” he said.
Moving forward however, Mr Flavell said he wouldn't be surprised to see demand for fixed rate products start to taper off.
“Given the Reserve Bank of Australia has indicated that they won't hesitate to cut rates again if the need arises, borrowers may be encouraged to take out variable rate home loans and take full advantage of the current low interest environment,” Mr Flavell said.
Across the country, demand for fixed rate products was highest in New South Wales, with this type of loan accounting for 28.42% of all home loans written throughout February.
Queensland and South Australia were not far behind, with fixed rate demand accounting for 23.64% and 17.29% respectively.
Meanwhile, Victoria and Western Australia saw lower levels of demand for fixed rates, with this type of product accounting for 16.92% and 13.23% of all loans written in each state respectively.
Overall, variable rate home loans remained the most popular with borrowers, with 77.72% opting for a variable rate mortgage in February.
“The property market may still be showing signs of volatility, but the reality is that interest rates continue to sit at all-time lows. So, regardless of whether a borrower takes on a variable or fixed rate mortgage they can rest assured that they're securing a great deal,” Mr Flavell said.