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The demand for fixed rate loans among Victorian borrowers fell to 21% of all approvals, its lowest level in over two years, the April 2008 Mortgage Choice housing loan approval data revealed.
Mortgage Choice National Corporate Affairs Manager, Warren O’Rourke said, “Demand in Victoria for fixed rate loans fell dramatically by 10 percentage points in April, down from 31% in March. Whilst a large shift from the previous month, it was not as significant as Queensland and South Australia recording between 17 and 18 percentage point falls in the month”.
“There is no doubt that the higher pricing of fixed rates weighed heavily against demand and a corresponding growth in variable loan products suggests that some borrowers are either chasing the discounts on variable rate products or, are more comfortable about the direction of interest rates.
“Fixed rate demand peaked as recently as February but the past two months has seen it drop from 35% to 21% in April 2008.
“While fixed rate loan products have become increasingly higher in price, making them less appealing than they were six months earlier, there are still some consumers fixing just for the peace of mind that a fixed rate loan provides. Others are hedging their bets, choosing to fix a portion of their loan to give them some security”.
Standard variable home loan demand increased to 45% of all loans approvals in Victoria, which is much higher than the 12-month average of 39%. Demand for this category of loan is very much driven by the discounts offered by many lenders when the loan is $150,000 or more.
The other interesting trend is that demand for basic variable loans in Victoria, which had been falling over recent months, represented almost 26% of all approvals. This was higher than last month’s 22% but on a par with the 12-month average.
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