Archives February 2024

In recent months, lenders have been quietly adjusting their mortgage rates and pulling back on key incentives, signaling an end to what experts have dubbed the “mortgage wars.” Despite the Reserve Bank of Australia (RBA) keeping the cash rate steady, banks are making moves to shore up their bottom lines and prepare for potential rate cuts later in the year.

According to industry experts, the days of banks enticing customers with cashbacks and other incentives seem to be fading. Peter Marshall, a banking and rates expert at Mozo, highlighted the shift in the home loan market away from intense competition among lenders. This move suggests a redirection of efforts toward enhancing profit margins amidst expectations of future rate cuts by the end of 2024.

85% Private Funding OZ-wide
Click here to send us a PRIVATE LOAN scenario

Recent data from the Australian Bureau of Statistics (ABS) indicates a decline in lending since July, with variable loan rates steadily increasing across various banking products. Some lenders have raised rates by as much as 30 percent on certain loan products, despite no movement in the cash rate by the RBA.

One notable example is Auswide, which raised its headline variable rate from 5.99 percent to 6.09 percent between December 2023 and January 2024. Marshall emphasized the importance for borrowers to monitor rate adjustments from lenders regularly, irrespective of RBA decisions.

While competition among banks for new mortgages has decreased, there’s a silver lining for borrowers considering fixed-rate options. Mozo reported a downward trend in fixed rates, with 13 lenders cutting rates in January, albeit by modest margins. Additionally, most lenders are extending fixed-rate terms, making these products increasingly attractive to mortgage holders.

In summary, borrowers should stay vigilant about rate movements and be proactive in reviewing their mortgage terms. With the mortgage landscape evolving rapidly, keeping a close eye on lender offerings and considering fixed-rate options could prove beneficial in navigating the changing market dynamics.

85% Private Funding OZ-wide
Click here to send us a PRIVATE LOAN scenario

The average mortgage size in Australia has soared to a record high, fueled by surging prices and rising interest rates. According to recent data released by the Australian Bureau of Statistics, the national average new mortgage size hit $624,383 in December 2023, marking an all-time high. Across states and territories, Queensland, South Australia, and Western Australia all witnessed record-high mortgage sizes.

Despite interest rates hovering in the ‘6’s, Australians are taking on hefty debts, raising concerns about their financial well-being. Sally Tindall, research director at ratecity.com.au, warns borrowers to assess their financial situation carefully before committing to large loans, emphasizing the potential risks associated with high levels of debt.

85% Private Funding OZ-wide
Click here to send us a PRIVATE LOAN scenario

While some individuals opt for substantial mortgages, there’s a stark decline in first homebuyer loan commitments, indicating the growing challenge of homeownership amidst soaring property prices. December witnessed an 8.4% drop in first homebuyer loan commitments nationwide, with significant declines observed in Queensland, Victoria, and NSW. Despite the downturn in December, 2023 saw a 12.9% increase in first homebuyer loans, with some states like South Australia, Tasmania, and the Northern Territory experiencing growth rates above five percent.

The broader lending market also saw a decline in new loan commitments in December, with owner-occupier loans falling by 5.6% and investor loans sliding by 1.3%. Master Builders Australia CEO Denita Wawn attributes the decline in first homebuyer activity to increased interest rates and surging house prices, which have strained the financial capacity of potential buyers.

Moreover, challenges persist on the supply side of the housing market, with input costs in the building sector continuing to rise. Despite hopes for a decline in building materials costs, the sector experienced a 0.3% increase in the last quarter of 2023, exacerbating the strain on housing affordability and supply.

As house prices continue to climb in early 2024, industry experts advocate for prompt action, including a potential interest rate cut by the Reserve Bank of Australia, to address the mounting challenges facing prospective homebuyers and the broader housing market.

85% Private Funding OZ-wide
Click here to send us a PRIVATE LOAN scenario