Variable rates are back in vogue, while fixed rate demand has fallen to a two-year low after dropping for the fourth consecutive month.
According to the latest national home loan approval data from Mortgage Choice, fixed rate home loans made up just 18 % of all loans written throughout March.
Mortgage Choice spokesperson Jessica Darnbrough said over the last 12 months, fixed rate demand has dropped from all-time highs to near record lows.
“Since December 2013, fixed rate demand has dropped approximately 15%, falling from the historical high of 33.06%,” Darnbrough said.
“Of course, with a majority of economists now predicting that the Reserve Bank of Australia will cut the cash rate again at either the April or May Board meeting, it is not surprising to see a larger number of borrowers opting for variable rate products.
Darnbrough said the data shows borrowers do not want to lock into fixed rate home loans if there may be future rate cuts on the horizon.
Fixed rate product demand was lowest in Victoria, accounting for 13.41% of all loans written in March.
Demand for fixed rate products in South Australia and West Australia were 16.87% and 18.58%, respectively.
New South Wales and Queensland saw the strongest demand at 19.27% and 19.62% respectively.
Variable rate demand was strong nationally, with ongoing discount products the most popular variable rate product on offer, accounting for 43.62% of all loans written.
Darnbrough said she didn’t expect demand for fixed rate home loans to pick up anytime soon.
“With the Reserve Bank of Australia actively indicating that it plans to cut rates again in the future, I wouldn’t be surprised to see an increasing number of borrowers flocking towards variable rate home loans,” she said.
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