Latest NewsFixed Rate Loan Popularity Dips below 7%Monday, 19 September 2016

The popularity of fixed rate loans in Australia has dropped to just under 7 per cent, as lenders continue to raise the interest rates applied to this loan type.

Demand for fixed products has remained under 10 per cent of all its loan approvals for the past 14 months, Mortgage Choice found in its August 2009 report.

"This is not surprising given the large pricing difference between fixed and variable rates plus uncertainty over the details of cash rate increases that are expected to occur soon," Mortgage Choice senior corporate affairs manager, Kristy Sheppard said.

Mortgage Choice said the data indicated Australians were uncertain as to whether it would be worth paying a significantly higher amount for the security over repayments that fixed loans provide.

"The popularity of fixed rates has veered between only two per cent and nine per cent of all our approvals since July last year - a long way from its peak of 39 per cent in November 2007." Ms Sheppard said.

The data also showed that demand for variable loans remained steady for the third consecutive month at 86 per cent, two percentage points below the 12-month average.

Standard variable loans hit 43.31 per cent, to overtake basic variables at 43.05 per cent in August.

"This indicates that a greater number of borrowers are happy to pay a little extra for the privilege of more flexibility and features within their standard variable home loan, perhaps as job security and economic stability concerns settle down," Mortgage Choice said.

"It could also be reflective of a rise in housing finance demand from the more confident categories of borrower - upgraders, refinancers and investors."

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