Demand for fixed rate home loans dropped marginally over July but an onslaught of rate cuts is expected to boost demand in August.
Fixed rates accounted for 23.95 per cent of all home loans written last month – down from 24.66 per cent the month before, according to Mortgage Choice’s latest Homeloan Choices data.
Mortgage Choice spokesperson Jessica Darnbrough expects fixed rate activity to pick up again over August as home buyers look to take advantage of the historically low fixed rates being offered by some of Australia’s lenders.
“Over the last few weeks, several of Australia’s lenders have slashed the interest on their suite of fixed rate products, taking their home loan rates to new historical lows,” Ms Darnbrough said.
At present, three of the four majors are offering five-year fixed rate mortgages with an interest rate of just 4.99 per cent – which is largely unheard of,” she said.
“With this in mind, it wouldn’t be a surprise to see fixed rate activity lift over August as borrowers opt to lock their mortgage in at the historically low rate and provide themselves with some certainty around their mortgage repayments for a specific time period.”
Across the country, fixed rates were most popular in Queensland, with this type of product accounting for 28.02 per cent of all loans written.
New South Wales was not far behind, with fixed rate home loans accounting for 25.89 per cent of all mortgages written last month.
Meanwhile, variable rate home loans were most popular in South Australia, accounting for 83.16 per cent of all loans written.
Western Australia and Victoria were not far behind, with variable rates accounting for 83.16 per cent and 80.07 per cent respectively.
“Of the variable rates, ongoing discount home loan products proved the most popular with borrowers, with this type of home loan accounting for 43.49 per cent of all mortgages written across Australia,” Ms Darnbrough said.
“Regardless of whether a borrower opts for a fixed or variable rate mortgage, with rates currently hovering around record lows, they are guaranteed to secure themselves a good rate.”