Rate cuts put a stop to rising fixed rate demand

Variable rate cuts put a stop last month to rising demand for fixed rate home loans, according to new home loan approval data from Mortgage Choice.

January 08, 2013

Variable rate cuts put a stop last month to rising demand for fixed rate home loans, according to new home loan approval data from Mortgage Choice.

The national mortgage broker's home loan figures show that after four consecutive months of rising appetite for fixed rate home loan products, borrower's interest in the more conservative loan type tapered off in December to 20.14% of new home loan approvals, down from 22.37% in November.

Falling below the 12-month average of 21%, fixed rate loan popularity decreased in the majority of states, by an average of 4.26 percentage points, but rose in Queensland by 4.12 percentage points.

Mortgage Choice spokesperson Belinda Williamson said, “Our data shows that fixed rates have fallen out of favour in December for the first time in five months as recent variable rate cuts gain the attention of the majority of new borrowers.”

December home loan data shows a rise in demand for variable rates to 79.86% from 77.63% in November.

“While fixed rate home loans continue to offer piece of mind with a steady repayment level, a variable rate home loan that has the potential to shift down in price is proving more attractive. In fact, four in every five new borrowers say they would opt for this type of loan,” said Ms Williamson.

“Borrowers may also be heeding the advice that there may be more cuts to come, particularly as recent media reports suggests some lenders may cut their home loan rates out of cycle with the Reserve Bank of Australia's cash rate setting and as soon as next month.”

Ms Williamson continued, “With further variable rate cuts still in the pipeline this new year, 2013 presents a great opportunity for borrowers who have done their homework and who have been waiting and watching to enter the property market.”

When delving further into the variable rate loan types, the data shows that ongoing discount rate loans remained the loan of choice, amounting to 41.16% of all new home loan approvals in December.  

Demand for basic variable rate home loans rose by 1.75 percentage points to 17.71%, while standard variable rates were relatively steady dipping by only 0.12 percentage points to 16.78%. Line of credit loans rose slightly to 3.26%, while introductory rates dropped marginally to 0.95%.


Note: Mortgage Choice 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 20 year old mortgage broker has a loan book of over $45 billion.

For archived copies of the Homeloan Choices bulletin, please refer to Choices Newsletter.


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

Belinda Williamson 
Mortgage Choice Corporate Affairs
(02) 8907 0472 / 0407 416 124 

Alicia Eu 
BlueChip Communication 
(02) 9018 8603 / 0412 550 004

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