Fixed rate home loans accounted for only 13.88% of all loans written for the month of October, according to national home loan approval data from Mortgage Choice. This is a drop from last month’s 14.41%.
The last time demand for fixed rate products dropped to this level was back in June 2011, said John Flavell, Mortgage Choice CEO.
Flavell pointed out that fixed rate loan demand has steadily dropped over the last four months.
“We had expected to see a slight lift in demand for fixed rate products last month, after all of the majors decided to increase the interest rates on their suite of variable owner occupied and investor products,” he said.
“That said, while the majors all raised their rates in October, most of the higher rates won’t come into effect until November 20. When this happens, we might start to see more property buyers opting for fixed rate products.”
Similar to the previous month, demand for fixed rate home loans was at its weakest in Victoria, accounting for just 8.65% of all loans written for October.
South Australia and Queensland also posted weaker demand for fixed rate products, accounting for 12.36% and 12.76% respectively. On the other hand, New South Wales recorded strong demand at 17.31% of all loans written.
Variable rate loans continue to dominate, with ongoing discount products making up 52.80% of all loans written for the period.
“Even though all of the majors have recently lifted their variable interest rates, the mortgage market continues to be very competitive,” Flavell observed.
“Lenders are still actively competing for market share through low rates, which opens up a great opportunity for potential and existing home owners who are in the market for a sharp deal.”
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