Close to a quarter of new home loan borrowers are opting for basic variable rate loans, as they look for ways to keep a lid on the cost of their mortgages.

Leading mortgage aggregator Australian Finance Group reported that 24.4 per cent of the loans written by its brokers in the September quarter were basic variable loans – the highest level in more than a decade.

AFG also reported that demand for fixed-rate loans has collapsed, with only 3.6 per cent of its loans set at fixed rates during the quarter.

AFG chief executive David Bailey said: “This is the lowest level of fixed-rate lending since we commenced reporting [in 2013]. Australia’s brief love affair with fixed-rate mortgage during the height of the pandemic has well and truly ended.

AFG recorded A$21.5 billion of home loan lodgements in the September quarter, down from $22.5 billion in the June quarter.

The average loan size has come down from a peak of $624, 077 in the December quarter last year to $595,515 in the September quarter and the average loan-to-valuation ratio fell from 68.7 per cent to 65.6 per cent over the same period.

The slowdown has been good for turnaround times, with the average number of days until formal approval, which averaged 17.2 days during the quarter, the lowest since AFG started reporting.

The big banks increased their share of AFG business during the quarter but this runs counter to APRA data, which shows ANZ losing share in recent months and the others growing at around system.