26/05/2008 - 12:04

Big fall in fixed rate loans

26/05/2008 - 12:04

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The demand for fixed rate loans among West Australians fell to 17 per cent of all approvals, its lowest level in over two years, Mortgage Choice's April 2008 loan approval data has found.

The demand for fixed rate loans among West Australians fell to 17 per cent of all approvals, its lowest level in over two years, Mortgage Choice's April 2008 loan approval data has found.

Mortgage Choice National Corporate Affairs Manager, Warren O'Rourke said, "Demand in Western Australia for fixed rate loans fell dramatically by 14 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 in February 2008 at 36% of all approvals and has been dropping ever since.

"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 42% of all loans approvals in Western Australia, which is much higher than the 12-month average of 34%. 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 Western Australia, which had been falling over recent months, represented almost 18% of all approvals. This was higher than last month's 17% but still lower than the 12-month average of 24%.

 

 

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