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ISCOVER
Staff Reporter
With fixed interest rates at historic lows and variable rates expected to drop in the coming months, more home owners are choosing to split their home loans.
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In the past four weeks, Loan Market Group has found that 27 per cent of its enquiries from home owners and buyers wanted to split their loan between fixed and variable rates.
Compared to the same period one year ago, there was a 70 per cent increase in the number of enquiries for borrowers opting to go the split route.
Loan Market corporate spokesperson Paul Smith said a loan split between fixed and variable portions enabled borrowers to enjoy the benefits of the different product types while minimising the drawbacks.
Mr Smith said split loans were particularly popular with young buyers getting into the property market. Often these buyers are feeling apprehensive about how to manage their new debt, whilst feeling comfortable in their ability to pay.
“The fixed potion of these loans gives borrowers certainty around their repayments and the variable portion allows flexibility to pay off their home loan quicker whenever their comfortable doing so,” he said.
“With fixed rates at near historic lows and likely not to drop too much further, many customers who would have traditionally gone with variable rates are opting for the fixed route to avoid the fear of missing out when rates eventually go back [up].”
