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The latest national home loan approval data from Mortgage Choice has found that the demand for fixed rate home loans has fallen for the fourth month in a row.
The data, released this week, shows that fixed rate home loans accounted for 22.81 per cent of all loans written throughout December.
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“We have seen a slight drop in the proportion of borrowers opting for a fixed rate mortgage over the past few months,” Mortgage Choice chief executive officer John Flavell said. “In August 2017, approximately 31 per cent of all borrowers selected a fixed rate mortgage. Since that time, fixed rate demand has fallen [by] 8.24 per cent to where it is today.
“Of course, this drop in fixed rate demand is not altogether surprising when you consider that the Reserve Bank of Australia has kept the official cash rate on hold for more than a year.”
With all signs suggesting that cash rate could remain lower for longer, Mr Flavell said that the desire for borrowers to lock into a fixed rate mortgage is weakening.
Across the country, Western Australia boasted the highest level of fixed rate demand, with this type of product accounting for 31.42 per cent of all loans written throughout the month of December, up from 17.59 per cent the month before.
South Australia wasn’t far behind, with fixed rate products accounting for 27.33 per cent of all loans written within the state throughout December.
Fixed rate demand was the lowest in Victoria where it accounted for 15.4 per cent of all home loans written.
Variable interest rate mortgages were the most popular products, making up 77.19 per cent of all loans written.
Mr Flavell said that he would not be surprised if there continued to be a slight decline in fixed rate demand.
“We may continue to see more people choose a variable home loan, particularly if the Reserve Bank of Australia continues to leave the official cash rate on hold,” the CEO said.
[Related: Major bank reduces fixed rates]
