A growing number of borrowers appear to be taking advantage of the current low interest rate environment following the RBA’s cash rate cut last month, choosing both standard and basic variable rate home loans, according to new home loan approval figures from Mortgage Choice.
Basic variable rate loans accounted for 12.64% of all new home loans registered with the aggregator last month, jumping from 10.99% in July. Standard variable rate loans also saw a rise to 16.51%, up from 14.94% in July and up from 12.36% in June.
“This increase in demand for both basic and standard variable rate loans may be driven by borrowers seeking loan options with no annual fee, which is the case with basic and standard variable loans but not so with other loan types like on-going discount loans,” says Mortgage Choice spokesperson, Melissa McCarney.
While ongoing discount rate loans are still a popular choice for borrowers, they lost favour slightly last month, falling by 2.08 percentage points to 37.47%.
Furthermore, fixed rate demand fell for the third month in a row to reach 27.86% at a national level, though at a state level, both New South Wales and Victoria saw a rise in demand for this loan type.
“It seems borrowers in both New South Wales and Victoria are keen to lock in rates now rather than banking on a further official cash rate cut in the months to come. For these borrowers the security of a fixed rate home loan may be more appealing than the flexibility and features offered by variable rate loans,” says McCarney.