Fixed rate loans continue to remain popular with new home buyers, Mortgage Choice has reported.
“New borrowers’ appetite for fixed rate loans is at a three and a half year high of 20 per cent of approvals and ongoing discount rate loans account for 43 per cent of approvals,” said Mortgage Choice spokesperson Kristy Sheppard.
The company reported that basic variable rates were the most popular with new home loan borrowers only 11 months ago, but today they have been far surpassed by ongoing discount rates and fixed rates.
“At that time, the no-frills product type accounted for 34 per cent of the broker’s new approvals,” the mortgage broking company said. “Today, this sits at less than 16 per cent, the second lowest point since Mortgage Choice began recording such data in January 2003.”
“When comparing our October loan approval data to that extracted one year ago, it’s remarkably obvious how much the industry has changed in reacting to subdued housing finance demand and a relatively positive interest rate outlook,” Ms Sheppard said.
“Then, basic variable rate was the loan of choice at just over 34 per cent of approvals. Standard variable rate followed with just under 34 per cent, then ongoing discount rate at 17 per cent and fixed rate at 11 per cent.
“That situation has now flipped.”
“In an environment of rising living costs and economic uncertainty it is unsurprising borrowers are taking advantage of the relatively low fixed rates and attractive variable rate discounts offered by lenders hungry for business.”
The popularity of standard variable, line of credit and introductory rate home loans all fell in October, to 15 per cent, four per cent and one per cent of approvals respectively. Basic variable demand rose slightly to 16 per cent.