According to the latest national home loan approval data from Mortgage Choice, fixed-rate home loans accounted for 22.28 per cent of all loans written throughout February – down from just 1.34 per cent the month prior.
Mortgage Choice chief executive officer John Flavell said despite the drop in demand, fixed rates continue to prove a popular choice for many borrowers.
“We are still seeing quite a bit of volatility in the interest rate market, causing many borrowers to opt for the security of a fixed-rate home loan,” he said.
Fixed rate demand was highest in New South Wales, accounting for 28.42 per cent of all home loans written throughout February.
In Queensland and South Australia, fixed rates accounted for 23.64 per cent and 17.29 per cent respectively of all loans written.
Victoria and Western Australia saw the lowest levels of fixed rate demand, accounting for 16.92 per cent and 13.23 per cent respectively of all loans written.
Mr Flavell said he wouldn’t be surprised to see fixed rate demand decrease even more.
“Given the Reserve Bank of Australia has indicated that they won’t hesitate to cut rates again if the need arises, borrowers may be encouraged to take out variable rate home loans and take full advantage of the current low interest [rate] environment,” he said.
Variable rate home loans remained the most popular choice for borrowers, accounting for 77.72 per cent of all loans written throughout February.
“The property market may still be showing signs of volatility, but the reality is that interest rates continue to sit at all-time lows,” Mr Flavell said.
“So, regardless of whether a borrower takes on a variable or fixed-rate mortgage, they can rest assured that they’re securing a great deal.”