Despite the RBA having just announced interest rates to remain unchanged this month, variable rate home loans are growing in popularity again as banks offer discounts to lure customers.
Variable home loans at Mortgage Choice accounted for 69.94 per cent of totals in December, and that figure has risen to 73.51 per cent in April. They reported that 74.13 per cent of their loans in May were variable, while just 25.87 were fixed.
Jessica Darnbrough from Mortgage Choice told The Adviser that lenders are offering great deals on variable rate loans to maintain their market share amongst very strong competition.
“We have seen some lenders offering discounts of up to 1.3 per cent and even 1.4 per cent off the standard variable rate,” she said.
“We haven’t seen this level of discounting for some time, so it is no surprise to see the popularity of variable rate products on the rise.”
Interestingly, a separate Mortgage Choice survey of first-time investors has found they are more concerned with the location of their investment than the interest rate they are getting for their loan.
50.6 per cent of respondents who had bought their first investment property in the last two years said that their biggest worry was finding the right property to invest in.
“For investors it seems location is everything,” Ms Darnbrough said.
“A property that is located in a good suburb and near the necessary amenities including cafes, restaurants and local transport, is likely to attract more tenants, which can help to increase the rental income generated by the property.”