Rate cuts put a stop to rising fixed rate demand

Four in five new borrowers attracted to variable rate

Variable rate cuts put a stop last month to rising demand for fixed rate home loans, according to new home loan approval data from Mortgage Choice.  

The national mortgage broker’s home loan figures show that after four consecutive months of rising appetite for fixed rate home loan products, borrower’s interest in the more conservative loan type tapered off in December to 20.14% of new home loan approvals, down from 22.37% in November.  

Falling below the 12-month average of 21%, fixed rate loan popularity decreased in the majority of states, by an average of 4.26 percentage points, but rose in Queensland by 4.12 percentage points.  

Local Mortgage Choice mortgage broker, Melissa Jackson said, “Mortgage Choice data shows that fixed rates have fallen out of favour in December for the first time in five months as recent variable rate cuts gain the attention of the majority of new borrowers.”  

December home loan data shows a rise in demand for variable rates to 79.86% from 77.63% in November. 

“While fixed rate home loans continue to offer piece of mind with a steady repayment level, a variable rate home loan that has the potential to shift down in price is proving more attractive. In fact, four in every five new borrowers say they would opt for this type of loan,” said Melissa.  

“Borrowers may also be heeding the advice that there may be more cuts to come, particularly as recent media reports suggests some lenders may cut their home loan rates out of cycle with the Reserve Bank of Australia’s cash rate setting and as soon as next month.”  

Melissa continued, “With further variable rate cuts still in the pipeline this new year, 2013 presents a great opportunity for borrowers who have done their homework and who have been waiting and watching to enter the property market.”  

When delving further into the variable rate loan types, the data shows that ongoing discount rate loans remained the loan of choice, amounting to 41.16% of all new home loan approvals in December.    

Demand for basic variable rate home loans rose by 1.75 percentage points to 17.71%, while standard variable rates were relatively steady dipping by only 0.12 percentage points to 16.78%. Line of credit loans rose slightly to 3.26%, while introductory rates dropped marginally to 0.95%.  

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

Ph 0405 315 227


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 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 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.  

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.  

Posted in: Interest rates

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