Borrowers favour discount loans
Ongoing discount home loans – where the interest rate is discounted over the entire loan term usually in return for an annual fee – remain the clear favourite among borrowers, according to Mortgage Choice figures.
With the Reserve Bank of Australia’s Board meeting tomorrow to decide on interest rates for the coming month, Mortgage Choice spokesperson Kristy Sheppard said ongoing discount home loans made up 32.2 per cent of the company’s approvals, dropping less than half a percentage point over the month.
The popularity of fixed interest rate home loans hit its highest level in five months in June, reaching 12.3 per cent of all Mortgage Choice approvals.
“Perhaps the constant speculation about interest rate rises in the latter half of 2011 and beyond convinced a higher number of borrowers to simply lock in their rate rather than feel their stomach churn with each piece of speculation,” Ms Sheppard said.
“July’s figures will be interesting because over the past month we’ve seen several lenders reduce their fixed rates on home loans. Now, there’s one tenth of a percentage point between the average three-year fixed rate, traditionally the most popular with borrowers, and the average basic variable rate. We haven’t seen that close a comparison in some time.”
Source: couriermail Qld.