RBA speculation sees borrowers turn to variable: Mortgage Choice

At the close of 2014, the big topic was whether the Reserve Bank (RBA) would actually cut rates this year, with an increasing number of experts forecasting the board would do just this.

It seems consumers may be responding to the speculation, according to Mortgage Choice spokesperson Jessica Darnbrough, who said their statistics show more borrowers choosing variable rates.

“At the beginning of December last year, speculation was rife that the Reserve Bank of Australia could cut the cash rate throughout 2015,” Darnbrough said.

“Ongoing weakness in the Australian and global economy has encouraged some analysts to change their cash rate forecasts to include up to two further rate cuts,” she said.

“While future cash rate cuts are purely speculation at the moment, it would seem the chatter has been enough to encourage more home buyers to take out a variable rate mortgage.”

Victorians are those most keen on variable rates, totalling 85.79% of all home loans written in December. South Australia and Western Australia totalled 82.81% and 82.11% respectively for variable rate loans.

New South Wales borrowers, at the bottom of the pile for variable rates, saw fixed rate demand strong at 30%.

“Australia’s lenders are offering some very sharply priced products at the moment, so regardless of what type of home loan product you eventually decide upon, now is a good time to be a home buyer,” said Darnbrough.