With a growing number of lenders offering significant variable rate discounts, it is unsurprising to see demand for this type of loan product back on the rise.
According to Mortgage Choice’s latest home loan approval figures, demand for variable rate products climbed 0.62% over the month of May to reach 74.13%.
Australia’s lenders are hungry for business and they have been offering some sensational variable rate discounts in a bid to attract borrowers and grow their market share. We have seen some lenders offering discounts of up to 1.3% and even 1.4% off the standard variable rate. We haven’t seen this level of discounting for some time, so it is no surprise to see the popularity of variable rate products on the rise.
Across the country, demand for variable rate loans increased in every state bar Victoria and Queensland. New South Wales led the charge, with demand for variable rate products jumping 7.25% over the month of May to sit at 73.65%. Meanwhile, variable rate products remained incredibly popular in both Western Australia and South Australia, with this type of product accounting for 80.15% and 78.24% respectively.
Demand for variable rate loans was lowest in Victoria and Queensland, with this product accounting for 71.92% and 70.16% respectively. While variable rate demand was sluggish in both Victoria and Queensland, fixed rate demand was on the rise, with the popularity of this loan product surging 8% in Victoria to sit at 28.08% and 4.62% in Queensland to sit at 29.84%.
But while Queensland and Victoria both saw a lift in fixed rate demand, the same could not be said for the rest of the country. Across Australia, fixed rates accounted for 25.87% of all loans written - significantly down from the 33.06% high recorded in December 2013. But while fixed rate demand slipped over the month of May, borrowers should be able to secure a competitive interest rate regardless if they opt for a fixed or variable rate product.
Australia’s lender’s have a real appetite for mortgages at the moment. As such, they are willing to offer sharply priced rates, significant discounts and other incentives, including cash back offers. So, if you have the ability to buy, now is a good time to jump onto the property ladder and take advantage of the low rate environment and lender competition.
Note: Mortgage Choice writes one home loan every 15 minutes in Australia, equating to approx. $10 billion in approvals per year, hence it provides a clear insight into borrower preferences.
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.