Login
ISCOVER
Demand for basic variable rate home loans has hit a historic low, according to new research.
According to new data from Mortgage Choice, basic variable rate home loans accounted for 10.99 per cent of all new loans approved by Mortgage Choice in July, which represents a monthly fall of 3.79 percentage points and brings demand for this loan type to the lowest level since reporting began in 2003.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
Mortgage Choice spokesperson Belinda Williamson said the increased preference for variable over fixed rate loans was very subdued in July.
“When drilling deeper into variable rates, we did see a significant drop in the preference for basic variable rate home loans, bringing the percentage of new loans for the ‘no frills’ product to an all-time low,” she said.
“At the same time, there was a noticeable increase in the market share of ongoing discounted and standard variable rate loans, with many new borrowers in July favouring the benefits of a flexible loan product mixed with a great interest rate.
“The number one preference in July was ongoing discount rate loans – where the interest rate is discounted over the entire loan term usually in return for an annual fee. The popularity of this loan type rose by 1.24 percentage points, to reach 39.55 per cent.
“Meanwhile, demand for standard variable rate loans – which are often packed with comprehensive features such as extra repayment options – reached a five-month high, rising by 2.58 percentage points to 14.94 per cent.”
