An increasing number of borrowers are choosing to take out a variable-rate mortgage, as demand for fixed-rate loans hits a two-year low.
According to data from Mortgage Choice, fixed-rate home loans accounted for just 20.6 per cent of all loans written in January – down from 22.3 per cent in December last year.
Variable rates accounted for 79.5 per cent of all loans written last month – up from 77.7 per cent in December.
Ongoing discount loans were the most popular variable-rate product type, accounting for 44.4 per cent of all variable-rate loans, while standard and basic variable-rate loans accounted for 16.9 per cent and 13.8 per cent respectively.
Line of credit loans accounted for 2.9 per cent of all variable-rate loans, while introductory-rate loans accounted for 1.5 per cent.
Mortgage Choice spokesperson Jessica Darnbrough said the last time fixed rates accounted for less than 21 per cent of all loans written was back in February 2013.
“Of course, given that many analysts are now predicting that the Reserve Bank of Australia will cut the cash rate [again] in the not-too-distant future, it is unsurprising to see demand for fixed-rate home loans decreasing and an increasing number of borrowers opting for a variable-rate home loan,” she said.
“At the end of the day, there is no right or wrong when it comes to choosing between a fixed and variable-rate home loan. It all comes down to personal preference and what option you feel most comfortable with.”