March 02, 2015
With the Reserve Bank of Australia cutting the cash rate last month, it is unsurprising to see a growing number of borrowers opting for a variable rate home loan given the amount of rate speculation.
Variable rate home loans accounted for 80.44% of all loans written by Mortgage Choice throughout February – up from 79.45% the month before.
Of the variable rate products available, ongoing discount products proved the most popular amongst borrowers, with this type of home loan accounting for 42.15% of all loans written last month.
Last month, the Reserve Bank of Australia decided to cut the official cash rate to the historical low of 2.25%. Following the Board’s decision to cut the cash rate, most of Australia’s lenders were quick to follow suit, slashing up to 30 basis points from their respective standard variable rates.
On top of that, speculation continues to mount that the Reserve Bank will look to cut the cash rate again in the not-too-distant future, which could cause home loan rates to fall even further. As such, it is unsurprising to see an increasing number of borrowers opting for a variable rate home loan, as they look to take advantage of the falling rate environment.
Variable rates were most popular in Victoria, with this type of home loan accounting for 88.00% of all loans written. South Australia and Western Australia were not far behind, with variable rates accounting for 86.06% and 80.79% respectively.
On the flipside, demand for variable rate mortgages was lowest in Queensland, with this type of product accounting for 76.83% of all loans written within the state last month.
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