Consumers demand variable loans
Variable interest rate demand has skyrocketed from 47 to 89 per cent over the past year, with dropping interest rates and an uncertain economic climate drawing conservative borrowers into flexible loan repayments, according to Mortgage Choice’s Housing Loan Demand Trends.
Fixed loans have plunged in comparison, from 34 per cent at the start of 2008 to 3 per cent at the end of December. They rose slightly to 4 per cent in January.
“The take-up of basic variable loans in particular demonstrates the increasingly conservative nature of the borrowing public in an uncertain economic climate. Borrowers are less concerned about loan features and are concentrating on overall cost, ensuring they are repaying as little as possible to finance their property dreams,” said Mortgage Choice senior corporate affairs manager Kristy Sheppard.
However, Sheppard said the fixed loan rate demand would probably not fall significantly more in 2009.
While 83 per cent of respondents expect rates to fall further in 2009, only 30 per cent of respondents said the fall would be between 0.5 and 1 per cent, while 23 per cent of respondents said the drop would be between 1 and 1.5 per cent.
More Australians are positive about their short-term future, while credit cards, personal loans, utility bills and food are weighing more heavily on consumers’ minds, the report said.
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