Demand for fixed rate home loans dropped in June for the first time since February, according to national home loan approval figures from Mortgage Choice.
Fixed rate home loans accounted for 28.30% of all new loans approved by Mortgage Choice in June, which shows a fall of 1.8 percentage points. This level of demand compares to 18.01% in June 2012, 12.33% in June 2011 and 2.62% in June 2010.
While fixed rate home loan approvals remain relatively high compared to previous years, the slight drop in favour for this loan type may be due to talk of further variable interest rate cuts this year.
It is interesting to note that the cooling in demand comes despite lenders re-pricing fixed rate loans and bringing out appealing offers in the hope of attracting more customers in the face of subdued home loan demand and uncertain economic conditions.
In June, approximately 63% of Mortgage Choice’s residential home loan lenders from the major banks to smaller banks, and non-bank lenders including credit unions and building societies, reduced the interest rate on their fixed rate home loans.
From a local perspective, every state witnessed a fall in fixed rate demand. Queensland was the leader for fixed rate demand at 33.77%, closely followed by New South Wales at 32.86%, South Australia at 24.88%, Western Australia at 23.11% and Victoria at 20.29%.