The demand for fixed rate home loans continues to fall despite variable rates beginning to rise, new data has revealed.
According to national home loan approval data from Mortgage Choice
, fixed rate home loans accounted for just 13.88% of all loans written throughout the month of October, down from 14.41% the month prior.
Mortgage Choice chief executive officer John Flavell says this is the lowest rate of demand since June 2011.
“Fixed rate demand has fallen every month for the last four months in a row,” he said.
“We had expected to see a slight lift in demand for fixed rate products last month, after all of the majors decided to increase the interest rates on their suite of variable owner occupied and investor products.
“That said, while the majors all raised their rates in October, most of the higher rates won’t come into effect until November 20. When this happens, we might start to see more property buyers opting for fixed rate products.”
According to the data, demand for fixed rate home loans was weakest in Victoria, where this type of product accounted for just 8.65% of all loans written.
In Queensland and South Australia, fixed rate home loans accounted for 12.36% and 12.76% respectively.
At the other end of the spectrum, fixed rate demand was strongest in New South Wales, with this type of product accounting for 17.31% of all loans written.
However, 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 52.80% of all loans written in October.
“Even though all of the majors have recently lifted their variable interest rates, the mortgage market continues to be very competitive,” Flavell said.
“Lenders are still actively competing for market share through low rates, which opens up a great opportunity for potential and existing home owners who are in the market for a sharp deal.”