This year is shaping up to be a busy time for the property market, a new report suggests.
The inaugural Home Loan Report* released this week by national mortgage broker Mortgage Choice shows that more than half (57 per cent) of prospective homebuyers delayed their buying until 2024.
It also indicated prospective buyers are looking forward to making progress on their property goals, with 70 per cent reporting feeling positive towards their purchase, up from just 59 per cent in May 2023. This is reflected in the 17.5 per cent annual increase in submissions made over the March quarter through Mortgage Choice’s network of brokers.
Announcing the findings, Mortgage Choice CEO Anthony Waldron said that brokers are reporting a sense of cautious optimism from customers, which is reinforced by this consumer research that shows a strong appetite for property purchases.
“Paired with the continuing momentum we’re seeing for new purchase loans, we anticipate stronger demand in the months ahead”, he added.
With the cash rate continuing to hold steady, home loan data in the Report shows a substantial reduction in refinancing activity, which has has dropped from 40 per cent of borrowings in the March 2023 quarter, to 26 per cent of borrowings in the March quarter of 2024.
“One of the primary factors driving the reduction in refinance activity is the fact that interest rates appear to have stabilised, with the Reserve Bank leaving the cash rate unchanged since November 2023”, Waldron said, adding that the fixed-rate ‘cliff’ has also now passed, with most borrowers who were on a fixed rate having already shifted to a variable rate.
The home loan data also confirmed that borrowers continue to prefer variable-rate mortgages. In the March 2023 quarter, 94.7 per cent of loans submitted were for variable rate home loans and just 5.3 per cent had a fixed component. Over the March 2024 quarter, 98.3 per cent of loans submitted were for variable-rate products, with just 1.7 per cent of submissions for fixed-rate loans.
Waldron showed little surprise that more borrowers are choosing variable rates.
“Fixed-rate home loan pricing has steadily increased, rising higher than variable rates”, he said. “Gone are the days of fixed rates under 2 per cent - borrowers would now struggle to lock in a fixed-rate under 6 per cent per annum.”
*The quarterly Mortgage Choice Home Loan Report provides insight into borrower sentiment, activity and trends based on Mortgage Choice home loan data, as well as consumer research commissioned through Honeycomb Strategy. This research provides insights into Australians’ sentiment, attitudes and intentions around mortgage borrowing.