Variable rate home loan demand is on the up following speculation that another rate cut may be in the works.
According to the latest national home loan approval data from Mortgage Choice
, variable rates accounted for 82.47% of all loans written throughout the month of June – up from 81.83% the month prior.
Of the variable rate products on offer, ongoing discount home loans dominated, with this product accounting for more than 46% of all loans written.
Mortgage Choice chief executive officer John Flavell says the slight lift in variable rate demand isn’t surprising given that the Reserve Bank continues to make it clear that it will cut rates “as necessary”.
governor Glenn Stevens has made it crystal clear in recent weeks that the Board will cut rates again if needed,” he said.
“It would seem the combination of low consumer sentiment and below-trend growth is encouraging the Reserve Bank to contemplate their current stance on monetary policy.
“But regardless of whether the Reserve Bank cuts the cash rate again in the short to medium term, it is clear that the Board has no intentions of raising the official cash rate any time soon.”
Across the country, variable rates were most popular in Western Australia, with this type of home loan accounting for 91.55% of all mortgages written. Victoria wasn’t far behind, with variable rates accounting for 88.6% of all loans written.
Meanwhile, fixed rate demand was strongest in New South Wales, with this type of product making up 23.1% of all loans written.
“Moving forward, the level of fixed rate demand will continue to be determined by what happens at the Reserve Bank’s Board meeting and their cash rate commentary,” Flavell said.