June 07, 2011
Ongoing discount interest rate home loans are now the top choice for 33% of new borrowers, according to May 2011 data from Australia's largest independently-owned mortgage broker, Mortgage Choice.
This is almost double the 17% approved in November 2010 and up three percentage points on April 2011. It is the second month this loan type - where the interest rate is discounted over the entire loan term usually in return for an annual fee - has won the ‘most popular' award.
Every state apart from SA saw a rise in demand last month for these variable rate loans. NSW led the pack with 42% of all approvals.
Variable rate products remain the clear favourite of today's borrowers, at 89% of approvals. Fixed rate loan demand has moved only slightly between 10% and 12% for four months now. Appetite dropped one percentage point from April to May, to 11% of approvals.
Company spokesperson Kristy Sheppard said, “There are some highly competitive deals on the table for new borrowers just as there are for those looking to refinance. Get out there and get amongst it if you're looking to enter the market. Take a good look around.”
“Many lenders, large and small, are enhancing their product offerings in an attempt to pull more business into their books. This increases the negotiating power you have as a borrower, especially if you work with an experienced mortgage broker that has a large lender panel.
“Anyone who hasn't at least explored their options could easily be giving themselves a raw deal by simply going with their everyday lender or ignoring the possibility of switching to a better suited or more affordable home loan.”
The second most popular loan type for May was standard variable rate, at 24%, closely followed by basic variable rate, at 23%. The popularity of line of credit home loans, often more popular with investors, rose one percentage point to 5% of approvals as did introductory rate loans.
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:
(02) 8907 0472 or 0407 416 124