June 13, 2013
Despite the cash rate cut in May and forecasts for more cuts to come, a growing number of new borrowers have chosen a fixed rate loan, according to national home loan approval figures from Mortgage Choice.
Fixed rate loans amounted to 30.10% of all new loans during the month of May. This is the fourth consecutive month that demand for this loan type has risen – rising by 13.75 percentage points since January.
Mortgage Choice spokesperson, Belinda Williamson said, “While the majority of people have again chosen variable rate loans this month, it is interesting to note that they continue to lose favour. This is despite slowly rising* consumer confidence and with talk of further rate cuts still on the cards.”
“For four consecutive months now a growing number of new borrowers have chosen a fixed rate loan. In fact, the uptake of fixed rate loans now sits almost seven percentage points above the six-month average.
“Given the ongoing, competitive pricing of fixed rate loans, it is possible that new borrowers choosing this loan type are motivated less by the peace of mind offered by steady repayments and more by the current offers.
“From a local perspective, all states apart from Victoria saw an increase in fixed rate demand. Queensland had the greatest rise, with the preference for fixed rates growing by 7.43 percentage points to reach 37.84%, which was the highest of any state. At the same time, demand dropped in Victoria by 0.03 of one percentage point to 21.21%, which was the lowest of any state.”
For archived copies of the Homeloan Choices bulletin, please refer to Choices Newsletter.
Note: Mortgage Choice writes one in every 25 new home loans in Australia, equating to approx. $10 billion in approvals per year, hence it provides a clear insight into borrower preferences. The 20 year old mortgage broker has a loan book of over $45 billion.
* Westpac - Melbourne Institute Survey of Consumer Sentiment – June 2013
For further information or to arrange an interview, please contact:
Mortgage Choice Corporate Affairs
(02) 8907 0472 / 0407 416 124
(02) 9018 8603 / 0412 550 004
This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the information, consider its appropriateness to your circumstances.