July 01, 2014
Variable rate home loan products continue to win over the hearts of borrowers, with demand for this type of product growing month on month.
According to Mortgage Choice's latest home loan approval figures, variable rate home loans accounted for 75.34 per cent of all home loans written in June – up 1.21 per cent on the month before.
“It is not surprising to see variable rate home loans continuing to grow in popularity,” Mortgage Choice spokesperson Jessica Darnbrough said.
“The Reserve Bank of Australia has made it clear they are happy with the current setting of monetary policy and they could leave rates on hold for some time yet. With that in mind, more borrowers are opting for a variable rate home loan, rather than lock themselves into a fixed rate.”
Of the various types of variable rate home loans available, ongoing discounts proved the most popular, with this type of product accounting for 39.62 per cent of all loans written.
Across the country, demand for ongoing discount products was highest in Western Australia and New South Wales, with this type of product accounting for 47.91 per cent and 45.32 per cent respectively.
“There is little wonder why ongoing discount products are proving so popular,” Ms Darnbrough said.
“Australia's lenders are hungry for business at the moment and, as such, have been offering some sensational variable rate discounts in a bid to attract borrowers and grow their market share.”
While variable rates continued to prove popular with borrowers, fixed rate demand was down in every state bar New South Wales and Queensland.
“In New South Wales, fixed rates accounted for 27.01 per cent of all loans written – up 0.66 per cent on last month. The story was much the same in Queensland, with fixed rate home loans accounting for 32.47 per cent of all loans written – up 2.63 per cent on last month,” Ms Darnbrough said.
But while Queensland and New South Wales both saw a lift in fixed rate demand, the same could not be said for the rest of the country.
In Victoria, fixed rate demand dropped by a massive 10.44 per cent over the month of June, while in Western Australia and South Australia, fixed rate demand fell by 1.63 per cent and 0.97 per cent respectively.
“While fixed rate demand has dwindled a little in certain states recently, the reality is borrowers can still secure themselves a very competitive rate – regardless if they opt for a variable or fixed rate home loan,” Ms Darnbrough said.
“Australia's lender's have a real appetite for mortgages at the moment. And as such, they are willing to offer sharply priced rates, significant discounts and other incentives, including cash back offers,” she said.
For archived copies of the Homeloan Choices bulletin, please refer to Choices Newsletter.