A spate of variable rate cuts put a stop to rising demand for fixed rate home loans in December, according to one of Australia’s biggest brokerages.
Mortgage Choice’s home loan figures show that after four consecutive months of increasing popularity, borrowers' interest in the product tapered off towards the end of last year.
In December, 20.14 per cent of Mortgage Choice’s new home loan approvals were fixed rate loans, down from 22.37 per cent in November.
The popularity of fixed rate loans has now dropped below Mortgage Choice’s 12-month average of 21 per cent. Demand for the products decreased in a majority of states by an average of 4.26 per cent, but rose in Queensland by 4.12 per cent.
“Our data shows that fixed rates have fallen out of favour in December for the first time in five months as recent variable rate cuts gain the attention of the majority of new borrowers,” Mortgage Choice spokesperson Belinda Williamson said.
“Borrowers may also be heeding the advice that there are more cuts to come, particularly as recent media reports suggest some lenders may cut their home loan rates out of cycle with the Reserve Bank of Australia’s cash rate setting and as soon as next month.”