Fewer borrowers are looking for fixed rate mortgages, instead opting to reap the benefits of the continually low cash rate, new data has revealed.
National home loan approval data from Mortgage Choice has shown that fixed rates made up 24.3 per cent of all home loans written in November, the lowest it’s been since March 2017.
Speaking of the change, Mortgage Choice chief executive officer John Flavell said: “Firstly, the Reserve Bank of Australia has kept the cash rate on hold at 1.5 per cent for more than a year. Looking forward, there is nothing to suggest that the Reserve Bank will start to rapidly and dramatically increase the cash rate.
“Borrowers are acutely aware of this and, as a result, are happy to ride the variable rate wave rather than lock themselves into a fixed rate home loan.”
Mr Flavell added that improved loan products offered by lenders are also making variable rate loans more “desirable” to borrowers.
“Over the last few weeks, we have seen a number of lenders trim the interest rates on some of their variable rate products,” the CEO said. “Moreover, a number of Australia’s lenders are offering competitive rates and discounts on their variable rate home loan products.”
The chief executive also suggested that he wouldn’t be surprised if demand for fixed rates continued to decline.
“The fact is, most lenders are offering very competitive variable rates at the moment. Borrowers are acutely aware of this and are looking to take advantage of the low variable rate environment.
“Of course, there are also some very competitive fixed rates on offer at the moment, too. With that said, regardless of which product a borrower opts for, they can be assured of securing a very sharp rate.
“Rates are sharp and some of the heat has come out of the property market. Both of these elements combined make for a perfect buying market.”
Borrowers in Queensland were most keen on fixed rate mortgages (which accounted for 28.99 per cent of all home loans written by Mortgage Choice brokers in the state in November), followed by South Australia (27.16 per cent).
Demand for fixed rates was at its lowest in Victoria, with fixed rate mortgages accounting for 13.47 per cent of all home loans written.
[Related: Major bank reduces fixed rates]
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