Australia’s financial comparison website (Canstar) in their March analysis of home loan rates revealed some exciting changes in the mortgage market, coinciding with a positive shift in Australia’s housing sector.
Here’s what happened last month:
Home loan market activity
The home loan market saw a flurry of activity with many lenders adjusting their rates. This increased competition is good news for borrowers as it often leads to competitive deals and lower interest rates.
- Housing market recovery
Australia’s housing market bounced back from its recent downturn. This suggests that property values are showing signs of an increase again in many parts of Australia after a period of small, declined growth. - Rate cut impact
The Reserve Bank of Australia (RBA) interest rate cut in March was the first in over 4 years. With some lenders dropping their fixed rates early in anticipation of the rate cut, we have already started to observe a significant effect on the property market.
Rate cuts:
• lower borrowing costs
• typically increase buyer confidence in the property market, and
• encourage more people to consider purchasing homes - Boosted buyer sentiment
Rate cuts make potential homebuyers feel more optimistic about entering the property market.This increased confidence is likely to lead to:
• More people attending open houses
• Higher auction clearance rates
• Potentially faster property sales
The combination of more competitive home loan rates and lower interest rates from the RBA appears to be turning the housing market around.
Current trends in variable mortgage rates
Current trends in variable mortgage rates are showing a positive shift for borrowers in Australia. The recent RBA decision to cut the cash rate by 0.25% has led to widespread reductions in variable home loan rates. Most lenders, including the Big Four banks, have passed on this rate cut to their customers.
The average variable interest rate for owner occupiers paying principal and interest in March was about 6.59%.
However, the current market offers more competitive options, with the lowest available variable rate across any loan to value ratio (LVR) sitting at an attractive 5.59%.
The home loan landscape has become increasingly favourable for borrowers:
- There are now 358 rates under 5.75%.
- 80 lenders reduced their rates last month.
- 35 lenders are offering at least one variable rate under 5.75%.
It’s worth noting that most of these competitive rates are not offered by major banks.
While these trends are promising, it’s crucial to remember that finding the right home loan involves more than just chasing the lowest rate. Each borrower’s situation is unique, and what works for one may not be ideal for another.
This is especially important if you are guiding your adult children into the property market. The home loan we secured for you may not be the most appropriate for your young adult first home
buyer.
So make sure they talk to us before heading to your lender.
Professional guidance can be invaluable in navigating the complex mortgage market and finding a loan that suits your specific needs and circumstances.
If your current home loan interest rate doesn’t start with a 5, it may be worth exploring your options.
However, rather than attempting to rate chase on your own, consider seeking assistance from our experienced finance team to ensure you’re making an informed decision that aligns with your finance goals and situation.