May rate cut doesn?t deliver increased variable rate demand

Fixed rate demand rises in May for the fourth consecutive month  

Despite the cash rate cut in May and forecasts for more cuts to come, a growing number of new borrowers have chosen a fixed rate loan, according to national home loan approval figures from Mortgage Choice.  

Fixed rate loans amounted to 30.10% of all new loans during the month of May. This is the fourth consecutive month that demand for this loan type has risen – rising by 13.75 percentage points since January.  

Local Mortgage Choice mortgage broker, Melissa Jackson said, “While the majority of people have again chosen variable rate loans this month, it is interesting to note that they continue to lose favour.

This is despite slowly rising* consumer confidence and with talk of further rate cuts still on the cards.”  

“For four consecutive months now a growing number of new borrowers have chosen a fixed rate loan. In fact, the uptake of fixed rate loans now sits almost seven percentage points above the six-month average.  

“Given the ongoing, competitive pricing of fixed rate loans, it is possible that new borrowers choosing this loan type are motivated less by the peace of mind offered by steady repayments and more by the current offers.  

“From a local perspective, all states apart from Victoria saw an increase in fixed rate demand. Queensland had the greatest rise, with the preference for fixed rates growing by 7.43 percentage points to reach 37.84%, which was the highest of any state. At the same time, demand dropped in Victoria by 0.03 of one percentage point to 21.21%, which was the lowest of any state.”  

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

Note: Mortgage Choice writes one in every 25 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.  

* To view the Westpac - Melbourne Institute Survey of Consumer Sentiment – June 2013 – please email me for a copy of the full document.    

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

Melissa Jackson

Mortgage Choice

0405 315 227

melissa.jackson@mortgagechoice.com.au

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 information, consider its appropriateness to your circumstances.    

About Mortgage Choice  

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 one in every 25 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 providing referrals for 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.  

To cater to the growing needs of its customers, Mortgage Choice soft-launched in October 2012 its new financial planning business. Mortgage Choice Financial Planning will officially launch in FY14.  

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 77 62.      

 

 

 

Posted in: Home loans

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