Australian borrowers have proved to be on the ball, with demand for variable rate home loans increasing after the Reserve Bank of Australia (RBA) trimmed the official cash rate last month.
Figures released yesterday by Mortgage Choice have revealed the RBA’s decision to move the cash rate from 2% to 1.75% saw demand for variable rate home loans increase by 0.52%, with variable rate loans accounting for 76.11% of all loans written in May.
Mortgage Choice chief executive officer John Flavell said the increase was of little surprise given the fact the RBA’s reduction had been passed on by a number of lenders.
“After the Reserve Bank’s decision to cut the cash rate at its May Board meeting, three of the four majors passed on the full rate cut – trimming their variable rates by 25 basis points,” Flavell said.
“With that in mind, it was hardly surprising to see a lift in demand for variable rate products this month. Borrowers are clearly looking to take advantage of the historically low rate environment,” he said.
Across the country, demand for variable rate products was highest in Victoria, with them accounting for 86.65% of all loans written in May.
Western Australia and South Australia weren’t too far behind, with variable rate products accounting for 78.62% and 77.85% respectively.
Variable rate demand was lowest in New South Wales, with it accounting for 71.47% of all loans written.
With speculation mounting the RBA could soon lower the rate again Flavell said he expects demand for variable rate loans to keep increasing; however current conditions likely mean borrowers are getting a good deal no matter what type of loan they have.
“Regardless of whether Australians decide on a variable rate, fixed rate or split rate mortgage, they can be guaranteed of securing themselves a very competitive interest rate,” he said.
“With the cash rate hitting 1.75% in May, the interest rates offered by Australia’s lenders have never been lower. These low interest rates are making the cost of borrowing more affordable than ever before – which is great news for home buyers, refinancers and investors.”
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