Discrepancies in state-based home loan choices revealed
FOLLOWING the recent decision made by some lenders to lower their fixed rate home loans, it comes as no surprise that Mortgage Choice's monthly loan product preference data shows a marked increase in February for the more conservative loan type.
Fixed rate loan demand rose in February by 2.06 percentage points to reach 18.41 per cent of all new loan approvals.
However, interestingly, the demand for fixed rates varied considerably from state to state, with almost 12 percentage points separating the highest and lowest levels of demand.
Mortgage Choice spokesperson, Belinda Williamson said, "During the month of February, fixed rate loans were most popular in Queensland, where demand reached 23.05% of all new loan approvals".
"Following the spate of natural disasters the sunshine state has endured over the past few years, in comparison to other states it isn't surprising to see more borrowers in Queensland choose the peace of mind offered by fixed rate loans.
"At the other end of the spectrum, Victorians were the least likely to take out a fixed rate loan in February.
In fact, only 11.08% of the state's loan approvals were for fixed rates, compared to the national average of 18.41%.
"This may suggest that Victorians are the least conservative state and are tipping further variable rate cuts to come."
Ms Williamson went on to explain that fixed rates are not the only loan type where the states showed varying degrees of demand.
"Ongoing discount variable rate loans were the loan of choice across all states.
"Victoria led the charge, at 44.34% of new loan approvals, followed closely by New South Wales at 43.61% and Western Australia at 43.48%.
"However, there was a considerable gap to the next states in line, Queensland, at 39.17% of new loan approvals and South Australia at 38.06%.
"South Australian borrowers were in front of the other states when it came to their preference for basic variable loans, at 25.50% of new loan approvals.
"This state's demand for the 'no frills' loan, which tends to have a lower interest rate and fees, says a lot about the conservative nature of South Australians.
"Residents within the resource states of Western Australia and Queensland were the biggest consumers of standard variable loans, at 21.30% and 18.15%, respectively.
"These loans offer more features and flexibility than the basic loans and often have an interest rate discount attached to them.
"The higher demand for standard variable rates in these two states indicates residents are happy to make slightly higher repayments in return for all the 'bells and whistles'.
"Line of credit loans, which are popular with experienced borrowers who want to utilise the equity they've built in a property, were most common in New South Wales at 4.14% of all new loan approvals.
The remaining states showed little interest with demand for line of credit loans ranging from 3.82% to 0.85%.
"Surprisingly, Western Australians were the only real takers of introductory rate loans, at 4.90% of new loans. This compared to an average across the remaining states of 1.80%."