Investors and borrowers continue to seek out fixed rate home loans, new national data has revealed.
Almost one quarter (24 per cent) of all new home loan approvals in December were for fixed rate mortgages, a 3 per cent increase on November, according to Mortgage Choice national loan approval data.
Fixed rate mortgages had been steadily increasing as a preference for seven consecutive months in 2011.
"Consecutive cash rate cuts in November and December 2011 have not swayed Australian borrowers' desire for fixed rate loans," said Mortgage Choice spokesperson Belinda Williamson.
Certainty around property and home repayments, as well as affordability, may have been driving factors in this increase said Ms Williamson.
Fixed rate mortgages still remain significantly lower than variable rates, despite a decreasing interest in all variable loans (falling overall from 79 per cent to 76 per cent).
"Our loan data shows fixed rates are now more in demand than they have been in over three and a half years at the expense of variable rates, which have lost popularity among new borrowers,” said Ms Williamson.
“The most popular variable rate home loan with new borrowers, ongoing discount rate loans, slipped from 44% to 41%, also well below the 12-month average of 35%."
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