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Fixed-rate demand continues to fall
According to the latest national home loan approval data from Mortgage Choice, fixed-rate home loans made up just 18 per cent of all loans written throughout March – a two-year low.
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Mortgage Choice spokesperson Jessica Darnbrough said over the past 12 months, fixed-rate demand has dropped from all-time highs to near-record lows.
“Since December 2013, fixed-rate demand has dropped approximately 15 per cent, falling from the historical high of 33.06 per cent,” Ms Darnbrough said.
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“Of course, with a majority of economists now predicting that the Reserve Bank of Australia will cut the cash rate again at either the April or May board meeting, it is not surprising to see a larger number of borrowers opting for variable rate products,” she said.
“History has shown us that when the cash rate drops, many of Australia’s lenders follow suit, trimming the interest on their suite of variable-rate products. And looking at our latest home loan choices data, it is clear that borrowers are not wanting to lock themselves into a fixed-rate home loan in order to take advantage of any future rate cuts.”
Across the country, fixed-rate demand was lowest in Victoria, where this type of product accounted for just 13.41 per cent of all loans written last month.
South Australia and Western Australia's figures were not much greater, with demand for fixed-rate products just 16.87 per cent and 18.58 per cent respectively.
Demand for fixed-rate home loans was highest in New South Wales and Queensland, with this type of product accounting for 19.27 per cent and 19.62 per cent respectively.
Meanwhile, variable-rate demand was strong across the country, with ongoing discount products once again proving to be the most popular variable-rate product on offer, accounting for 43.62 per cent of all loans written.
Ms Darnbrough said she did not expect demand for fixed-rate home loans to pick up anytime soon.
“With the Reserve Bank of Australia actively indicating that it plans to cut rates again in the future, I wouldn’t be surprised to see an increasing number of borrowers flocking towards variable-rate home loans,” she said.
[Related: Mortgage group sees surge in investor loans]
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