September 04, 2012
August saw the popularity of fixed interest rate home loans rise by five percentage points to 20% of new loan approvals, according to Mortgage Choice, Australia's largest independently-operated mortgage broker. This trend was supported by lenders introducing a range of attractive reduced fixed rate loans.
Mortgage Choice customer data for August 2012 shows that as fixed rate loan popularity grew so did that of basic variable rate loans, which reached a 14-month high to 21% of all new loans. Meanwhile, ongoing discount rate loan demand fell for the first time in five months.
Company spokesperson Belinda Williamson said, “The surprising result to come out of our August data is that the preference for ongoing discount rate loans – where the rate is discounted over the entire loan term – fell to 38% from 44%. This is the first time in five months that demand for this loan type has diminished.”
“This news comes as lenders have been tweaking their fixed rate loans, making the price of such loans more competitive in some cases when compared to variable rates. Looking at Mortgage Choice's lender panel, the average three-year fixed rate, the most popular fixed rate term, currently sits at just over 6%. This is about 30 percentage points lower than the average basic variable rate home loan.”
“The upward trend in fixed rate loan demand was evident in all states except Western Australia, where fixed rate demand fell by one percentage point.”
Ms Williamson went on to say that the latest Mortgage Choice data reflects the prevailing conservative attitude of Australians.
“Many more mortgage holders are locking in the interest rate on part or all of their loan so they can structure their repayments and take better control over their finances,” she said.
“It is obvious that concerns about our domestic economy, rising utility bills and other living cost hikes along with predictions of fewer rate cuts taking place this year are having an effect on the purchasing decisions of Australians. Home loan choices are no exception.”
Basic variable rate loan demand inched up by one percentage point to 21% of all new home loan approvals, while the uptake of standard variable rates did exactly the opposite, falling by one percentage point to 17%. Meanwhile, the uptake of line of credit and introductory rate home loans remained steady.
Note: Mortgage Choice currently writes almost one in every 20 new home loans in Australia, equating to approx. $10 billion in approvals per year, hence it provides a clear insight into borrower preferences. The 19 year old mortgage broker has a loan book of over $42 billion.
For further information or to arrange an interview, please contact:
Mortgage Choice Corporate Affairs
02 8907 0472 / 0407 416 124
02 9018 8608 / 0404 381 886