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Home Loan Choices

<p> <strong>Fixed rate demand reaches highest level in 2+ years</strong></p> <p> Standard variable remains the favourite</p> <p> 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&rsquo;s largest independently-owned mortgage broker.</p> <p> &nbsp;</p> <p> This level of demand was well ahead of the national six-month average of 3.7% and the 12-month average of 2.7%.</p> <p> &nbsp;</p> <p> 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%.</p> <p> &nbsp;</p> <p> Mortgage Choice spokesperson Kristy Sheppard said, &ldquo;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.&rdquo;</p> <p> &nbsp;</p> <p> &ldquo;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.</p> <p> &nbsp;</p> <p> &ldquo;The interest rates on these loans have now risen and we&rsquo;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.</p> <p> &nbsp;</p> <p> &ldquo;However, this expected drop may be offset by a probable increase in borrowers&rsquo; predilection towards fixed rates due to November&rsquo;s cash rate rise and the subsequent lender rate rises.</p> <p> &nbsp;</p> <p> &ldquo;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%.&rdquo;</p> <p> &nbsp;</p> <p> Other key home loan choice trends for the month were:</p> <ul> <li> Line of credit (often popular with investors): fell to 3.9% of approvals from 4.8%.</li> <li> Bridging (for those selling property while purchasing another): remained below 1%.</li> </ul> <p> <em>Note: Mortgage Choice&rsquo;s annual loan approvals are around 40,000 nationally and therefore provide a clear insight into the product preferences of housing loan borrowers generally.</em></p>

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