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The demand for fixed rates continues to drop, with fixed rate products now accounting for just 2.3 per cent of all new loan approvals.
According to a report by Mortgage Choice, fixed rate products have accounted for less than 10 per cent of the company’s new loan approvals for the past 17 months.
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Mortgage Choice’s senior corporate affairs manager Kristy Sheppard said fixed rate loan demand has suffered its greatest fall over the last four months, after enjoying increasing popularity from March to July this year.
“Australians are carefully weighing up the substantial extra cost of fixing their home loan against the interest rate rises predicted for the next couple of years. The result is that fixing continued to hold little appeal to new borrowers at the end of spring, but I expect to see a rise in demand as we move through 2010 with increasingly higher rates,” Ms Sheppard said.
“Nevertheless, all states currently show fixed rate loan demand at somewhere between 2.06 per cent and 2.50 per cent of new approvals. Almost all new borrowers were choosing to ride out rate rises in November, with the popularity of variable loans increasing to 97.7 per cent of Australian loan approvals.
“The most popular loan types overall were basic variable, leading the way at 43.8 per cent of new approvals, standard variable at 31.6 per cent and special variable at 16.0 per cent. Line of credit hit 6.1 per cent of all approvals while bridging accounted for a small 0.2 per cent.”
