Split loans rising in popularity
More borrowers than ever before are choosing to split their home loan between fixed and variable rates, mortgage broker Loan Market has said.
The number of customers enquiring about split loans has risen by 70 per cent, to make up 27 per cent of Loan Market’s enquiries over the past month.
Loan Market corporate spokesperson Paul Smith said a loan split between fixed and variable portions enabled borrowers to enjoy the benefits of the different product types while minimising the drawbacks.
Mr Smith said that split loans were particularly popular with young buyers getting into the property market. Often these buyers are feeling apprehensive about how to manage their new debt, whilst feeling comfortable in their ability to pay.
“The fixed potion of these loans gives borrowers certainty around their repayments and the variable portion allows flexibility to pay off their home loan quicker whenever their comfortable doing so”, he said.
“With fixed rates at near historic lows and likely not to drop too much further, many customers who would have traditionally gone with variable rates are opting for the fixed route to avoid the fear of missing out when rates eventually go back up."