Western Australian borrowers appear to have focused on basic variable interest rate loans, the latest Mortgage Choice national housing loan approval data for September 2006 has revealed.
At the same time, fixed rate loans, which had been at historically high levels, continued the trend in September with 26 per cent of all approvals in this category up from 24 per cent the previous month. This is consistent with the national average.
In a recent move, a number of lenders are offering highly competitive fixed rate loans that are priced similarly to a basic variable loan and with borrowers still concerned about the prospect of further interest rate rises it will be instructive to see which direction fixed rate loans will take in October and November.
Mortgage Choice corporate affairs manager Warren O'Rourke said basic variable home loans represented 35 per cent of all WA loan approvals in September, up from 28 per cent the previous month and well above with the national average of 26 per cent.
"Western Australian borrowers have opted for the lower priced basic variable loans available with limited redraws and no high annual fees. Many see this option as being more attractive than the standard variable professional package with a 0.7 per cent discount," he said.
This change in demand influenced a dramatic drop in approvals of standard variable loans down to 18 per cent from a solid 32 per cent the previous month. This is 17 percentage points below the national average. Line of credit loans were up on the prior month from 14 per cent to 17per cent.
There is a strong demand for this product category for renovations, equity investments and so on, influenced by the dramatic growth
in wealth generated by the Western Australian housing boom over the past few years.
