Demand for fixed rate home loans has fallen for the sixth consecutive month, new data has revealed.
The latest national home loan approval data from Mortgage Choice found that fixed rate home loans accounted for 21.75 per cent of all loans written throughout February.
“We first saw demand for fixed rate home loans fall in September 2017 when just over 28 per cent of customers opted for a fixed rate mortgage. In February, this percentage dropped to 21.75 per cent,” Mortgage Choice chief executive officer John Flavell said.
“A growing proportion of Australians are opting for a variable rate home loan. In fact, we saw a total of 78.25 per cent of borrowers opting for a variable home loan product in February, up from 77.93 per cent in January.
“While the trend is not surprising, mounting speculation of at least one cash rate rise later this year may encourage borrowers to consider fixing part of their home loan in the near future.”
Across the country, the proportion of customers taking out fixed home loans eased in every state except Queensland and South Australia. Fixed rate loans accounted for 28.07 per cent of all loans written in Queensland throughout the month of February, up from 26.33 per cent in January.
In South Australia, fixed rate products accounted for 24.19 per cent. This was a notable increase from 16.60 per cent the month prior but in line with the six-month average of 24.48 per cent.
Fixed rate demand was lowest in Victoria, for the third consecutive month, where it accounted for 10.97 per cent of all home loans written.
Looking ahead, Mr Flavell said that he would not be surprised to see a change in fixed rate demand.
“We may see an increase in demand for fixed rate products in the future, particularly if the Reserve Bank of Australia raises the official cash rate,” the CEO said.
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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