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Ongoing speculation about another rate cut this year has encouraged an increasing number of borrowers to opt for a variable rate home loan, new research has shown.
Fresh figures from Mortgage Choice show that variable loans made up 82.3 per cent of all loans written in September — up from 79.7 per cent the month before.
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Chief executive officer John Flavell attributed the uptick to mounting speculation that the RBA could potentially cut the cash rate again before the end of the year.
“Borrowers are clearly hoping rates will fall further in the future and are keen to take advantage of this possibility by choosing a variable rate mortgage,” he explained.
“While future cash rates are purely speculation at the moment, it would seem the chatter has been enough to encourage more home buyers to take out a variable rate mortgage,” he said.
“Regardless of whether borrowers opt for fixed or variable rate products, they can be assured of securing a very competitive rate,” he added.
According to Mortgage Choice variable rate demand was highest in Victoria and Tasmania, accounting for 93.4 per cent of all home loans written in September.
This was closely followed by Western Australia and Queensland, with variable rates making up 83.6 per cent and 80.1 per cent respectively.
Meanwhile, demand was lowest in NSW, with variable rate home loans accounting for 79.9 per cent of all loans written.
[Related: Home loan rate cuts diverge from RBA hold]
