Demand for fixed home loans sharply decreased in the previous month, new research claims.
Fixed rate home loans accounted for only 14.41% of all loans written for the entire month of September, according to the latest national home loan approval records from Mortgage Choice. Compared to August’s records, the September figure was down 17.41%.
The fall is so significant that Mortgage Choice chief executive officer John Flavell noted that demand has not been that low for more than four years.
“The last time fixed rate demand was this low was back in August 2011, when this type of home loan accounted for 13.78% of all home loans written,” he said.
Flavell suggested that the fall is the result of more borrowers choosing variable rate home loans, and believes that borrowers felt confident enough that the rates will not increase anytime soon.
He also took note of the Reserve Bank of Australia’s September meeting, wherein participants concluded that inflation will remain consistent with the target over the next two years or so.
Among the states, Victoria had the weakest demand for fixed rate home loans at 8.61%, while Western Australia was not far behind with 12.35%.
On the other hand, New South Wales posted the strongest demand for fixed rate loans, at 16.65%.
“While the property market is showing signs of volatility at the moment, one thing is constant – low rates,” said Flavell.
“While rates are low and there is little talk of future rate hikes, borrowers will continue to opt for variable rate products.”
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