by Venessa Paech
Mortgage Choice’s monthly loan product preference data for February shows borrowers in different states are taking different tacts with their loans.
The demand for fixed rate loans varied considerably from state to state, with almost 12 percentage points separating the highest and lowest levels of demand.
Fixed rate loans were most popular in Queensland, making up 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,” said Mortgage Choice spokesperson, Belinda Williamson.
Queenslanders have opted for more conservative loans in February
Victorians were the least likely to take out a fixed rate loan. 11.08% of the state’s loan approvals were for fixed rates, compared to the national average of 18.41%.
Discount variable rate loans were favoured by many; Victorians at 44.34% New South Wales at 43.61% and Western Australia at 43.48%.
They were less popular with Queenslanders, comprising 39.17% of new loan approvals, and only 38.06% of new approvals in South Australia.
But 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,” said Belinda Williamson.
Borrowers in Western Australia and Queensland were the biggest consumers of standard variable loans, at 21.30% and 18.15%, respectively. These loans claim to offer more features and flexibility than basic loans and may have an interest rate discount.
Line of credit loans, which let borrowers use the equity in an existing property, were most common in New South Wales, making up 4.14% of new loan approvals in February.
“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%.”
Fixed rate loan demand rose in February by 2.06 percentage points to reach 18.41% of all new loan approvals.