Fresh figures have revealed that the current low interest rate environment continues to drive demand for fixed rate home loans, which accounted for 20.32 per cent of all loans written in August.
According to Mortgage Choice’s latest national home loan approval data, fixed rate home loans accounted for 20.32 per cent of all loans written throughout the month of August, up from 20.24 per cent the month prior.
Mortgage Choice chief executive officer John Flavell said the lift in fixed rate demand is “largely unsurprising”.
Mr Flavell pointed to the Reserve Bank’s decision to cut the official cost of borrowing to the record low of 1.50 per cent in August.
“Given the RBA held the cash rate at 1.50 per cent in September, we might start to see more interest in fixed rate home loans as people start to question if now is a good time to lock in a rate,” he said.
“If the RBA does cut the cash rate again, it is clear that Australia’s lenders are unlikely to pass on the full rate reduction.”
Mortgage Choice’s home loan approval data found that across the country, fixed rate demand was highest in Western Australia, accounting for 25.78 per cent of all home loans written in August.
Queensland and NSW followed closely, with fixed rates accounting for 24.72 per cent and 22.91 per cent respectively of all loans written.
Demand for fixed rate home loans was lowest in Victoria, accounting for only 9.06 per cent of all loans written.
Overall, Mortgage Choice’s figures revealed that variable rates were the most popular among borrowers, with ongoing discount rates accounting for 45.14 per cent of all loans written.
[Related: Bank slashes rates by up to 50 basis points]