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The take up of fixed rate home loans more than doubled over October to reach a 27-month high of 7.7% of all new approvals for Mortgage Choice, Australia’s largest independently-owned mortgage broker.

This level of demand was well ahead of the national six-month average of 3.7% and the 12-month average of 2.7%.

The popularity of this more conservative type of loan rose in every state during the month. Queensland experienced the most take up, at 9.2%, and South Australia the least, at 4.0%.

Mortgage Choice spokesperson Kristy Sheppard said, “The demand for fixed rate home loans increased substantially across Australia in October, by over four percentage points to 7.7% of all our new home loan approvals. This was the highest level seen since July 2008.”

“One major reason was the introduction by each of two smaller lenders on our panel of a well-rounded fixed rate home loan. Both products had a low interest rate and agreeable features. A number of borrowers who were considering taking out a fixed rate loan jumped on one of the deals when presented with them, in the face of much talk around upcoming rate rises.

“The interest rates on these loans have now risen and we’re yet to see any new fixed term products that match the original offers in terms of both pricing and quality, so fixed rate demand may drop a little this month. Another factor would be that the average three and five-year fixed rates remain higher than the average standard variable and basic variable rates.

“However, this expected drop may be offset by a probable increase in borrowers’ predilection towards fixed rates due to November’s cash rate rise and the subsequent lender rate rises.

“In other loan type news, standard variable home loans remained the product of choice, at 47.4% of all loan approvals. Basic variable followed at 40.3%.”

Other key home loan choice trends for the month were:

Line of credit (often popular with investors): fell to 3.9% of approvals from 4.8%. Bridging (for those selling property while purchasing another): remained below 1%.

Mortgage Choice has a national network of hundreds of franchises and loan consultants supported by Group and State Offices. They provide guidance on, and choice of, home loans offered by an extensive panel of leading lenders. Many consultants provide a broader service offering, also helping customers source commercial and personal loans, asset finance, deposit bonds, and risk and general insurances.

Importantly, Group Office pays franchisees the same commission rate for home loans they write, regardless of the rate paid by the lender selected by a new customer. It has done so for most of its 18-year history, working in each customer’s interests to source a solution that suits their individual needs.

Mortgage Choice has no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. It listed on the ASX in 2004 (sign: MOC) and is a member of the Mortgage & Finance Association of Australia (MFAA).

Story by www.australianhousehunters.com.au

Tags: banks, economy, finance, interest, investment, money, mortgage, news, property, rates, real estate, research

View the original article here

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