Fixed rate demand falls to new lows

September 04, 2015
Whitney Evans

Demand for fixed rate home loans fell to its lowest level in almost three years, new research has revealed.

According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for 17.41% of all loans written throughout the month of August – down 1.05% from 18.46% the month prior.

Local Mortgage Choice franchise owner/mortgage broker Antony Muir said the drop in fixed rate demand was surprising given the current volatility of the home loan market.

“Generally speaking, when the market is volatile and lenders are moving their rates – as they are doing now – fixed rate demand increases, as borrowers look for security and consistency around their mortgage repayments,” he said.

“In recent weeks, many of Australia’s lenders have increased their interest rates across their suite of investment products. Despite this, more borrowers are choosing variable rate home loans over fixed rate mortgages.”

Mr Muir said the last time fixed rate demand was this low was back in January 2013.

“It has been 31 months - or almost three years – since fixed rate demand was this low. Across Australia, fixed rate demand was lowest in Victoria, with this type of product accounting for just 11.66% of all loans written throughout August,” he said.

“Western Australia and South Australia weren’t far behind, with fixed rates accounting for 14.16% and 14.59% of all loans written in both states respectively.”

Of the variable rate loans on offer, ongoing discount products once again proved the most popular with borrowers, with this type of product making up 48.38% of all loans written in August.

“With rates sitting at historically low levels, it is fair to say that regardless of whether a borrower chooses a fixed rate or variable rate home loan, they are going to secure a competitive rate,” Mr Muir said.

“But while borrowers are guaranteed to secure a low rate, it is critical that they still do their due diligence and research what products are available. Over the last few months, the home loan market has become incredibly complex. With the Australian Prudential Regulation Authority stating that lenders should limit their growth in investment lending to 10% each year, a lot of the banks have started to make some significant changes to both their mortgage policy and pricing. With that in mind, it makes sense for all borrowers to speak with a professional to ensure they are getting the right home loan for their needs.”

For more information, please contact Antony Muir on 07 5504 5569 

 

 

 

 

NSW/ACT

VIC/TAS

QLD

SA/NT

WA

 Variable

79.42%

88.34%

81.80%

85.41%

85.84%

Basic Variable

7.57%

21.72%

14.61%

23.17%

17.76%

Standard Variable

17.84%

24.06%

13.16%

10.44%

17.53%

Ongoing Discount

50.83%

37.27%

52.60%

49.61%

43.98%

Line of Credit

2.00%

2.08%

0.46%

1.92%

3.89%

Introductory Rate

1.18%

3.21%

0.97%

0.27%

2.68%

 Fixed

20.58%

11.66%

18.20%

14.59%

14.16%

                     

 

 

 

Important information

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 advice, consider its appropriateness to your circumstances.

About Mortgage Choice

Mortgage Choice is an ASX listed company that seeks to help Australians with all of their financial needs.

Established in 1992, Mortgage Choice was originally established to help Australians improve their financial situation by offering a choice of home loan providers, coupled with the expert advice of a mortgage professional.

Since that time, the company has grown and developed into a fully fledged financial services provider.

Today, Mortgage Choice helps customers source car loans, personal loans, credit cards, commercial loans, asset finance, deposit bonds, and risk and general insurance.

Further, the company offers Australians access to real, relevant and affordable financial advice through our qualified financial advisers.

Mortgage Choice has no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. It listed on the ASX in 2004 (MOC) and is a member of the Mortgage & Finance Association of Australia (MFAA).

Mortgage Choice holds an Australian Credit Licence: no. 382869 and Mortgage Choice Financial Planning Pty Limited holds an Australian Financial Services Licence: no. 422854. Both licences are issued by ASIC.

Recent recognition: 2014 Australian Broking Awards Best Diversification Program; 2013, 2012, 2011 Australian Broking Awards Major Brokerage of the Year – Franchise; 2013, 2012 Australian Broking Awards Best Ethical/Social Responsibility Program; 2012 Australian Broking Awards Best Training and Education;   No.1 on The Adviser magazine’s 2012, 2011, 2010 and 2009 Top 25 Brokerages list; 2012, 2010, 2009, 2008, 2006 and 2005 MFAA Awards Retail Aggregator/Originator of the Year; 2011, 2010, 2009 and 2008 10 Thousand FEET Top 10 Franchise list; 2010 Forbes Asia-Pacific Best Under A Billion list.

Visit www.mortgagechoice.com.au or call customer service on 13 77 62.

Posted in: Home loans

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