Indications from the Reserve Bank of Australia that an interest rate cut could be on the cards later this year led to a decline in the popularity of fixed-rate home loans over February.
According to figures from Mortgage Choice, fixed rate home loans made a up 22.28% of all loans written during February, a 1.34% fall from the 23.62% they accounted for in January.
Mortgage Choice chief executive John Flavell said there is still some volatility in the current interest rate environment, but that he wouldn’t be surprised to see a decline in demand for fixed rate loans over the coming months.
“We are still seeing quite a bit of volatility in the interest rate market, causing many borrowers to opt for the security of a fixed rate home loan,” Flavell said.
“Given the Reserve Bank of Australia has indicated that they won’t hesitate to cut rates again if the need arises, borrowers may be encouraged to take out variable rate home loans and take full advantage of the current low interest environment,” he said.
Demand for fixed rate products was highest in New South Wales, making up 28.42% of all home loans written throughout February.
Queensland and South Australia were not far behind, with fixed rate loans accounting for 23.64% and 17.29% of mortgages through February respectively.
Meanwhile, Victoria and Western Australia saw lower levels of demand, with fixed rate demand in the states sitting at 16.92% and 13.23%, respectively.
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