Western Australian borrowers reacted to the August 2006 interest rate rise by embracing fixed loans in growing numbers, the latest Mortgage Choice national housing loan approval data has revealed.
Fixed rate loans which had been at historically high levels, grew further in August to 24 per cent of all approvals up from 20 per cent in July 2006. However, this is still six percentage points below the national average. Standard variable loans - the dominant home loan category over the past six months - continued to reign in August but approvals did drop marginally to just below 33 per cent.
Mortgage Choice national corporate affairs manager Warren O'Rourke said the growth in demand for fixed rates was understandable, with speculation about another rate rise in November.
"Obviously, borrowers are concerned about the prospect of further interest rate rises and, want some certainty about their home loan repayments going forward."
Western Australian borrowers still continue to show a strong preference for standard variable loans as a means to accommodate higher average loan sizes and higher property prices. Standard variable loan demand (principally influenced by the discounts available through the many professional packages) accounted for 33 per cent of all Western Australian home loan approvals in August 2006. This is slightly lower than the national average of 35 per cent.
Demand for basic variable continued to fall, with August demand at 26 per cent, down from 28 per cent of approvals for this category in July. Line of credit loans were down on the prior month dropping from 17 per cent to 16 per cent.
