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Home buyers flock to ‘safer’ variable rate mortgages

With the global economic crisis pushing down interest rates to their lowest level in 49 years, home buyers are flocking back to variable interest rate mortgages, which now account for 91 percent of the residential lending market.

Mortgage broker Mortgage Choice have reported that in April basic variable mortgages accounted for 48.15 percent of all home loans approved – up nearly one percent from March, while standard variable mortgages comprised 42.77 percent of the market, down 1.47 per cent from March.

According to Mortgage Choice senior corporate affairs manager Kristy Sheppard, basic variable loans have been the most popular loan type for four months now, with consumers seeking out ‘safer’ and more conservation loan options in the current climate.

“Despite interest rates being at their lowest in decades, the volatile global and domestic economic climate is having a strong influence over loan product preferences,” Ms Sheppard said.

“Consumer conservatism with rates and fees continues to win out against loan flexibility and extra features.”

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