Australian Property News

Fixed rate loans gain market share

Posted on Wednesday, March 10 2010 at 11:45 AM

New mortgagees have recently doubled the Australian market share of fixed rate loans from just below one per cent in January to more than two per cent in February, according to Mortgage Choice home loan February data.

In the same month, Western Australia's fixed rate demand increased from a record zero per cent to four per cent market share.

But the fixed rate home loan option still has a long way to go to reach its 38 per cent new approvals peak in November 2007, said senior corporate affairs manager Kristy Sheppard.

She said Victoria was the only state that didn't follow this trend, and instead fixed rate demand actually fell to a record low of 0.65 per cent for new approvals.

"In a rising interest rate environment," said Sheppard of the reason why fixed rate loans still remained low, "savvy borrowers look for a competitive product that makes a statement in terms of affordability and flexibility."

In the variable loan category, standard variable loans increased in popularity, climbing one percentage point to 49 per cent of February approvals to its unchanged number one position.