By Robert Carry
The number of homebuyers across Australia choosing fixed interest rate home loans has continued to fall, according to new data from broker firm Mortgage Choice.
According to the figures, based on Mortgage Choice's 40,000 annual loan approvals, fixed rate loans now account for less than 3% of all new approvals. Meanwhile, demand for variable rate loans rose by two percentage points, now accounting for 97% of approvals.
Fixed rate products have accounted for less than 10% of the company's new loan approvals for the past 16 months, with the firm saying variable rate loans have become almost exclusively the loan of choice for recent home loan borrowers.
Senior corporate affairs manager, Kristy Sheppard said, "Fixed rate loan demand dropped from 5% of home loan approvals in September to less than 3% in October, which is unsurprising, considering fixed loans can be priced up to two percentage points higher, or more, than variable loans. Fixing holds little appeal to new borrowers at present."
Victoria was the only state to record a steady demand for fixed rate mortgages. "The popularity of fixed rates hasn't reached such a low level since April this year, although we may see a turnaround in the not too distant future as borrowers prepare for more rate rises," added Sheppard.
According the firm, the most popular loan types among its customers were basic variable, standard variable and special variable products.
The October results suggested recent Australian borrowers are far more willing to see fluctuating payments than to pay extra to fix their rate.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan