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The Reserve Bank of Australia’s February rate cut has led to more borrowers choosing variable rate home loans, according to Mortgage Choice.
The group’s latest national home loan approval data states variable rate home loans accounted for 80.44 per cent of all loans written throughout February, up from 79.45 per cent in January.
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Ongoing discount products [of the variable rate products available] proved the most popular amongst borrowers, with this type of home loan accounting for 42.15 per cent of loans written last month.
Mortgage Choice spokesperson Jessica Darnbrough said the results are not surprising, given the amount of speculation surrounding further rate cuts.
“Speculation continues to mount that the Reserve Bank will look to cut the cash rate again in the not-too-distant future, which could cause home loan rates to fall even further,” she said.
“As such, it is unsurprising to see an increasing number of borrowers opting for a variable rate home loan, as they look to take advantage of the falling rate environment.”
Ms Darnbrough also noted the demand for fixed rate home loans has decreased in the last 12 months.
“In December 2013, fixed rate demand peaked at 33.06 per cent, while today this type of home loans accounts for just 19.56 per cent of all loans written,” she said.
“While fixed rate pricing has dropped dramatically across the board in recent months, it seems borrowers are more comfortable taking out a variable rate mortgage.”
The data shows variable rates as the most popular in Victoria, accounting for 88 per cent of all loans written, while South Australia and Western Australia had variable rates accounting for 86.06 per cent and 80.79 per cent respectively.
Queensland had the lowest demand for variable rate mortgages, accounting for 76.83 per cent of all loans written last month.
