More borrowers are seeking out variable rate home loans, taking advantage of the current low interest rate environment.
Home loan approval figures from Mortgage Choice show basic variable rate home loans amounted to 12.64 per cent of all new home loans during August, increasing from 10.99 per cent in July, with standard variable rate home loans jumping from 14.94 per cent to 16.51 per cent.
Mortgage Choice spokesperson Melissa McCarney said borrowers appear to be taking advantage of recent sharp variable rate pricing, with the official cash rate at an all-time low after the cash rate cut in August, and talk of at least one more cut this year.
“This increase in demand for both basic and standard variable rate loans may be driven by borrowers seeking loan options with no annual fee, which is the case with basic and standard variable loans but not so with other loan types like ongoing discount loans.”
Meanwhile, demand for fixed-rate loans fell for the third month in a row to reach 27.86 per cent nationally, although demand for these types of loans rose in New South Wales and Victoria.
“It seems borrowers in both New South Wales and Victoria are keen to lock in rates now rather than banking on a further official cash rate cut in the months to come,” Ms McCarney said.
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