Borrowers fixing rates in time for Christmas

More than one in five undeterred to fix despite possible variable rate cuts   Fixed rate home loans continue to lure more new borrowers despite the possibility of variable rate cuts this month. New data from Mortgage Choice, the country’s largest independently-operated mortgage broker, shows fixed rate loan demand rose marginally in November to 22.37% from 21.72% in October.  

Uptake for fixed rate loans increased for the fourth consecutive month in the majority of states, by an average of 3.39 percentage points, but dropped in QLD by 6.76 percentage points. 

Local Mortgage Choice mortgage broker, Melissa Jackson said, “Our data shows that more than one in every five new borrowers is not phased by the possibility of further variable rate cuts as early as this week, having locked in to a fixed rate loan with repayment certainty for the next year or more.”  

“With fixed rates at their lowest level since 2009, there are bargains on offer to both new and existing borrowers. Lenders continue to tweak their fixed rate loan pricing based on their desire for business while factoring in their funding costs and the level of demand from borrowers.  

“When investigating the option to fix part or all of your home loan’s interest rate, be sure to weigh up your options carefully as fixed rate loans have both pros and cons. Remember, the interest rate is not the only factor to consider, also compare any initial, recurring and break costs, the ability to make extra repayments and redraw, lender service and how long the loan will take to be approved.”

While many fixed rate loans are currently priced lower than variable rates, the majority of borrowers are choosing the latter.  

“Despite a marginal dip in demand in November by 0.65 percentage points to 77.63%, variable interest rate loans remain the top choice for Australian mortgage holders. Ongoing discount rate loans - where the rate is negotiated to a reduced amount over the loan term usually in return for an annual fee - remained the loan of choice, accounting for 41% of all new home loan approvals,” said Melissa.  

“Borrowers who are leaning towards variable rates and who have their heart set of further rate cuts will be holding their breathe this week to see if the Reserve Bank of Australia heeds warning signs from the retail, manufacturing and housing markets and cuts rates in time for the Christmas.”  

Standard variable rate loan demand rose by 1.41 percentage points to 16.90% of all new loan approvals, while the preference for basic variable rates dropped by 2.82 percentage points to 15.96%. At the same time, line of credit and introductory rate loan appeal remained relatively steady at 2.91% and 1.29%, respectively. 

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.

Visit Melissa Jackson’s website at www.mortgagechoice.com.au/melissa.jackson or call 0405 315 227.

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

Melissa Jackson

Mortgage Choice

0405 315 227

melissa.jackson@mortgagechoice.com.au

About Mortgage Choice

Australia’s largest independently-operated mortgage broker, Mortgage Choice has sourced a home loan for well over 350,000 people since 1992. It works with all manner of property finance borrowers via hundreds of franchises.  

The company writes almost in every 20 home loans in Australia by providing professional guidance on, and choice of, products offered by an extensive panel of leading lenders. Many of its brokers provide a broader service, helping customers source commercial and personal loans, asset finance, deposit bonds and risk and general insurances.  

Uniquely, Mortgage Choice pays its franchisees the same commission rate for home loans they write, regardless of rate paid by the lender a new customer selects, working in the customer’s best interests to tailor a solution to them.  

The company 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).  

Recent recognition: 2012, 2011 Australian Broking Awards Major Brokerage of the Year – Franchise; 2012 Australian Broking Awards Best Training and Education; 2012 Australian Broking Awards Best Ethical/Social Responsibility Program;  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.  

Mortgage Choice holds an Australian Credit Licence: no. 382869, issued by ASIC.  

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

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