It seems that Variable Home Loan numbers are at a 21 month high in Australia with fixed home loans only making up 2% of the mortgage market.
Despite the talk in the media of lenders considering lifting interest rates outside of the RBA increases, most people seem to prefer variable rate home loans.
Currently there is only a very small gap in the cost of the cheapest available three year fixed mortgage and a 30-year $300,000 principal and interest loan – on average $98.
Variable home loans from mainstream lender generally come with a range of professional packages offering cheaper rates. ‘Pro packs’ tend to offer interest rate discounts along with ‘Gold’ credit cards and other special features.
Mortgage Choice spokesperson Kristy Sheppard said that on a national level, the demand for fixed rate loans has stood at less than 5% of all the company’s.
In New South Wales the take up numbers for fixed home loans are only marginally higher at 3% of all approvals. Western Australia, the state with the lowest level of demand, saw less than half a percent of its approved July home loans being fixed, which was a decrease of almost two percentage points from June.”
Many people are searching for the cheapest available rate, generally offered by the Basic variable home loan. Line of credit often popular with investors is also in demand as are low doc home loans and bad credit home loans. Much of the refinance activity is generated by those looking to consolidate their unsecured debts in their mortgage.