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Fixed rate home loan demand has fallen to its lowest level in almost three years, according to new data by Mortgage Choice.
The group’s latest national home loan approval data revealed fixed rate home loans accounted for just 17.41 per cent of all loans written throughout August, down from 18.46 per cent the month prior – the lowest level since January 2013.
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Mortgage Choice chief executive John Flavell said the drop in fixed rate demand is unexpected.
“Generally speaking, when the market is volatile and lenders are moving their rates – as they are doing now – fixed rate demand increases, as borrowers look for security and consistency around their mortgage repayments,” he said.
“In recent weeks, many of Australia’s lenders have increased their interest rates across their suite of investment products. Despite this, more borrowers are choosing variable rate home loans over fixed rate mortgages.”
Nationwide, fixed rate demand continued to be the strongest in New South Wales, with this type of home loan accounting for 20.58 per cent of all loans written in August.
This was followed by Queensland and South Australia, with fixed rate home loans accounting for 18.20 per cent and 14.59 per cent of all loans written, respectively.
Western Australia and Victoria saw the lowest demand for fixed rate products, with this type of home loan accounting for 14.16 per cent and 11.66 per cent, respectively.
The data revealed that variable rate home loans continue to dominate borrower demand, accounting for 82.59 per cent of all loans written throughout August.
Of the variable rate loans on offer, ongoing discount products continue to be the most popular with borrowers, with this type of product making up 48.38 per cent of all loans written in August.
“With rates sitting at historically low levels, it is fair to say that regardless of whether a borrower chooses a fixed rate or variable rate home loan, they are going to secure a competitive rate,” Mr Flavell said.
[Related: Rate war to heat up in Spring]
