September 02, 2014
Demand for fixed rate home loans grew last month, with this type of product accounting for almost one in every four mortgages written.
According to Mortgage Choice's latest Homeloan Choices data, fixed rates accounted for 24.19 per cent of all home loans written last month – up from 23.82 per cent recorded the month before.
Mortgage Choice spokesperson Jessica Darnbrough said it wasn't surprising to see demand for fixed rates grow last month given that so many of Australia's lenders recently trimmed the interest on their suite of fixed rate home loans.
“At the end of July, many of Australia's lenders slashed the interest off their suite of fixed rate products – most notably their five year home loans,” she said.
“Whenever lenders cut their rates, we tend to see a lift in demand for that type of product a few months later.
“As such, it wasn't surprising to see fixed rates starting to gain greater traction with borrowers in August. Moving forward, we expect fixed rate demand to climb slightly higher again throughout September, as more borrowers look to take advantage of the historically low fixed rates that Australia's lenders are currently offering.”
Across the country, fixed rates were most popular in Queensland, with this type of product accounting for 29.85 per cent of all loans written. South Australia and New South Wales were not far behind, with fixed rates home loans accounting for 25.83 and 25.30 per cent of all mortgages written last month.
Demand for fixed rates was lowest in Victoria, with this type of product accounting for just 16.70 per cent of all home loans written throughout August.
Instead, variable rates - specifically those with an ongoing discount - proved the most popular home loan product in Victoria, with variable rate home loans accounting for 83.3 per cent of all home loans written.
The story was much the same in Western Australia, where variable rates accounted for 80.94 per cent of all home loans written.
But regardless of which home loan product Australians opted for, Ms Darnbrough said all borrowers would have secured an incredibly competitive rate, given that interest rates continue to hover around historical lows.
“Not only are rates low, but Australia's lenders have proven they are hungry for business and they are willing to cut the interest on their suite of products, offer significant discounts or other incentives in order to win business,” she said.
If you would like learn more about your home loan or financial advice options, call 13 77 62.