As talk of an official interest rate cut gains momentum, fixed rate mortgages are loosing popularity. According to July 2008 Mortgage Choice data, only 12% of all approvals in South Australia were for fixed rate loans, while demand for variable rate loans rose to 41% of all approvals.
Home buyers are looking carefully at interest rates and house prices, and trying to decide the best rate for the future for them. With the economy slowing and a now almost certain Reserve Bank interest rate cut, borrowers are seeing a variable rate loan as the more attractive option.
“The mortgage landscape has changed dramatically since January when fixed rate demand was at its peak at 45pc of all approvals but now it stands at 12pc in South Australia, while basic variable loan demand was 14pc at that time and is now 41pc,” Mortgage Choice national corporate affairs manager Warren O’Rourke said.
The downward demand for fixed rate loans is mirrored in Western Australia, where only 7% off all approvals were for fixed rate loans, which was a drop of 20% for the month of June. It seems many borrowers believe interest rates have reached their peak and are looking for the flexibility of a variable home loan.
Join the discussion on Fixed Interest Rate Home Loans
|