Variable Rate Loans are Attracting Aussies, Due to RBA Rate Cut Expectations
Along with the expectations that RBA will make further rate cuts Aussies are focusing more on variable rate loans rather that fixed-rate loans.
Figures found by Mortgage Choice shows that demand for fixed-rate loans hit a two-year low in March.
It can also be seen in the figures that the demand started dropping four months ago, which is roughly when expectations for Australia’s official interest rate took a dramatic turn, as economists changed their forecasts of rate hikes to cuts in response to disappointing economic data.
Mortgage Choice spokeswoman Jessica Darnbrough said, “Over the past 12 months, demand for fixed-rate loans had dropped from all-time highs to near record lows, accounting for just 18 per cent of loans written in March”.
She further added, “Since December 2013, fixed-rate demand has dropped approximately 15 per cent, falling from the historical high of 33.06 per cent. And the trend isn’t likely to change any time soon, with the RBA widely expected to cut the official interest rate to two per cent in April or May”.
News Source: http://www.theaustralian.com.au/business/financial-services/australians-ditch-fixed-rate-loans-as-new-rba-cut-looms/story-fn91wd6x-1227287597179