Strong Demand For Variable Rate Home Loans
An increasing number of borrowers have taken advantage of the low interest rate environment following the most recent decision of the Reserve Bank of Australia (RBA) to reduce the cash rate. According to new home loan approval figures from Mortgage Choice, borrowers are opting for home loans with standard and variable rates.
Of all new home loans arranged through the broker in August, 12.64% were basic variable rate loans; this is an increase on the figure of 10.99% achieved in July.
16.51% of new home loans were standard rate loans. In July, loans of this type accounted for 14.94% of new home loan approvals.
Mortgage Choice spokesperson, Melissa McCarney, claimed that the borrowers seem to be taking advantage of the newly lowered variable rates given, following rumours of another price cut being made by the RBA this year.
The figures also showed that although there was a reduced demand for fixed rate home loans for the third consecutive month, increases in demand for loans of this type were seen in NSW and Victoria. This suggested that borrowers in these states are eager to lock in rates now rather than hoping for more reductions to the official cash rate in the months ahead.
Those now choosing fixed rate home loans are likely to prefer the security of a fixed rate loan to the features and flexibility available with variable rate home loans.