Fixed rate home loan demand steadies

Although the popularity of fixed rate home loans remains higher than the last couple of years, it barely rose as 2011 began.

February 07, 2011

Although the popularity of fixed rate home loans remains higher than the last couple of years, it barely rose as 2011 began.

Has the increasing concern among consumers about further rate rises settled?

New data from Mortgage Choice, the country's largest independently-owned mortgage broker, shows 15.3% of the home loans approved for its customers in January had a fixed interest rate. This compares to 15.2% in December, 11.2% in November, 7.7% in October and 3.7% in September.

Uptake increased for the fourth consecutive month in the majority of states, by an average of 2.2 percentage points, but dropped in QLD and WA, by 2.9 and 2.8 percentage points respectively.

Mortgage Choice company spokesperson Kristy Sheppard said, "Australians' appetite for fixed rate home loans has risen consistently over the past six months, but that pace slowed right down in January."

"One has to question whether the demand for this more conservative loan type has steadied now it looks likely that the next cash rate rise has been pushed back to mid-year or later.

"Of all the mortgage types, ongoing discount loans - where the interest rate is discounted over the entire loan term usually in return for an annual fee - experienced the biggest increase in demand. They accounted for 25.3 percent of our January approvals, having risen 8.4 percentage points in the last two months."

Notwithstanding this trend standard variable rate home loans continue to be the favourite, at 30.7% of approvals, followed by the ongoing discount loan category, which overtook basic variable loans at 23.6% of approvals to hit second spot.

Demand for line of credit home loans (often popular with investors) dropped a little to 4.8% of approvals from 5.4% the month prior while introductory rate home loans accounted for only 0.2%.

Note: Mortgage Choice currently writes one in 25 new home loans in Australia, equating to over $10 billion in approvals per year, hence it provides a clear insight into borrower preferences. The 18+ year old mortgage broker has a loan book of over $40 billion.


For further information or to arrange an interview, please contact:

Belinda Williamson
Corporate Affairs
(02) 8907 0472 or 0407 416 124

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