The demand for fixed rate home loans has dropped to a four-year low as rates are tipped to remain at historically low levels for some time.
According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans accounted for just 14.41% of all loans written throughout the month of September, down from 17.41% in August.
Mortgage Choice chief executive officer John Flavell
said demand for fixed rate home loans hasn’t been this low for more than four years.
“The last time fixed rate demand was this low was back in August 2011, when this type of home loan accounted for 13.78% of all home loans written,” he said.
“It seems borrowers are increasingly opting for variable rate home loans as they believe rates are unlikely to rise for some time yet. And, if the minutes of the Reserve Bank of Australia’s September Board meeting are anything to go by, the official cash rate could be left on hold for the foreseeable future.”
Across the country, demand for fixed rate home loans was weakest in Victoria, where this type of product accounted for just 8.61% of all loans written.
Western Australia was not far behind, with fixed rate home loans accounting for 12.35% of all loans written. At the other end of the spectrum, fixed rate demand was strongest in New South Wales, with this type of product accounting for 16.65% of all loans written.
Of the variable rate loans on offer, ongoing discount products once again proved the most popular with borrowers, with this type of product making up 50.51% of all loans written in September.
“While the property market is showing signs of volatility at the moment, one thing is constant – low rates,” Flavell said.
“While rates are low and there is little talk of future rate hikes, borrowers will continue to opt for variable rate products.”