October 10, 2016
Ongoing speculation about another rate cut in the near future has encouraged an increasing number of borrowers to choose a variable rate home loan, new research has revealed.
According to the latest national home loan approval data from Mortgage Choice, variable rate home loans made up 83.28% of all loans written in September - up from 79.68% the month before.
Mortgage Choice chief executive officer John Flavell said with speculation mounting that the Reserve Bank of Australia could potentially cut the cash rate again in the coming months, it is not surprising to see an increasing number of borrowers opting for a variable rate home loan.
“Borrowers are clearly hoping rates will fall further in the future and are keen to take advantage of this possibility by choosing a variable rate mortgage,” he said.
“While future cash rate cuts are purely speculation at the moment, it would seem the chatter has been enough to encourage more home buyers to take out a variable rate mortgage.
“Regardless of whether borrowers opt for fixed or variable rate products, they can be assured of securing a very competitive rate,” he said.
Across the country, variable rate demand was highest in Victoria and Tasmania, with this type of product accounting for 93.43% of all home loans written throughout the month of September.
Western Australia and Queensland were not far behind, with variable rates accounting for 83.59% and 80.11% respectively.
Demand for variable rate home loans was lowest in New South Wales, with this type of product accounting for 79.88% of all loans written.
Of the various variable rate products on offer, ongoing discount products remained the fan favourite, with this type of home loan accounting for 48.48% of all loans written.