According to Mortgage Choice's latest home loan approval figures, variable rate home loans accounted for 75.34 per cent of all home loans written in June - up 1.21 per cent on the month before.

This is not surprising.

The Reserve Bank of Australia has made it clear that it's happy with the current setting of monetary policy and could leave rates on hold for some time yet.

With that in mind, more borrowers are opting for a variable rate home loan.

While fixed-rate demand has dwindled a little in certain states recently, the reality is borrowers can still secure themselves a very competitive rate - whether they opt for a variable or fixed rate home loan.

For borrowers considering switching loan types, it's important to be mindful that the interest rate should not be the driving force behind the decision, as both variable rate and fixed rate home loan options have pros and cons (which are based on loan flexibility, features and costs).

Put simply, variable rate loans tend to be more flexible in nature (with features as well as the interest rate) and you can take advantage of falls in market rates.

But when rates rise so too do your repayments.

On the other hand, fixed rate home loans allow you peace of mind, knowing what your repayment amount will be for a set period of time.

However, it is also important to remember that once you are locked into a fixed loan, you can incur break costs and a switch fee to move away from that loan type during the fixed period.

The cost involved can be quite high, depending on when and how long you fixed for and what the interest rate was at the time compared to where it now sits.

Another point that borrowers need to note is the fact that fixed rate loans will not always offer features such as offset, redraw or the ability to make unlimited extra payments without penalty.

Those who want the best of both worlds and to take advantage of the pros of each rate type - stability and flexibility - often choose to split their loan amounts between fixed and variable.

All in all, there is no right or wrong choice when entering the fixed versus variable decision process - there are risks associated with both loan types.

For more information phone Richard Windeyer on 1800 01 LOAN.