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ISCOVER
Staff Reporter
The percentage of new borrowers choosing variable rate home loans rose in June for the third consecutive month as rate cuts hit home, new data has revealed.
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According to the latest statistics by Mortgage Choice, borrowers have taken advantage of lenders’ recent rate cut offers by flocking to variable rate loans, with demand for this loan type rising by three percentage points to 82 per cent of all new home loan approvals last month.
This is the highest level recorded in nine months.
The biggest increase in variable rate loan approvals was in WA, which saw the popularity rise by seven percentage points, to reach 86 per cent of all new loans.
Mortgage Choice spokesperson Belinda Williamson said the data shows borrowers are now more confident about taking out a variable rate mortgage.
“The end of the financial year brought with it an air of optimism around the direction of interest rates as a growing number of home loan borrowers, more than one in four, chose variable rates. Perhaps whispers of one more rate cut in coming months is wielding influence,” she said.
“Borrowers may be incentivised by the cost gap between some variable and fixed rates.
“Our extensive lender panel, which consists of major and smaller banks, non-bank lenders, credit unions and building societies, currently has an average three-year fixed rate loan at 6.22 per cent. In comparison, the average standard variable rate is 6.79 per cent.
“However, it is possible for borrowers to negotiate a discount on their standard variable interest rate - to below 6 per cent in some instances. The majority of our new borrowers were taking up this loan option in June.”
