With interest rates falling, demand for fixed-rate home loans fell in June, accounting for 21% of all home loans written. According to new data from Mortgage Choice, this is the lowest level in almost eight years.
The decrease in demand for fixed loans is not surprising, with variable interest rate reductions following two consecutive cash rate cuts from the Reserve Bank. A snapshot of recent loan approval data suggests borrower preference for variable loans is growing.
Mortgage Choice Chief Executive Officer Susan Mitchell says: “We can see a clear shift towards variable rate loans. In fact, this type of loan product accounted for 86.5% of home loan applications submitted by our broker network, and only 13.5% of customers chose to fix.”
The June approval data revealed that variable rate demand was highest in Victoria, where 86% of borrowers opted for this type of product. This was followed by South Australia (82%), Western Australia (79%) and Queensland (77%). Borrowers in New South Wales were the least likely to apply for a variable rate home loan with 76% choosing this type of product.
But mortgage broker Louise Lucas of The Property Education Company says that while interest rates are trending lower, there’s still a case to be made for fixing, particularly for investors.
“We are getting really good interest rates for fixed loans, sometimes 30 or