Monthly Mortgage Market Update – April 2024

With April coming to an end, let’s look at what’s going on in the property market. Here are four important updates on the home loans activity, interest rates and price growth.

  • Mortgage activity up 13.3%
  • Prices rise in 88.4% of suburbs
  • Borrowers meeting commitments
  • Five tips to beat other buyers

The value of new mortgage borrowing is continuing to increase, as more buyers enter the market and property prices – and therefore loan sizes – keep rising.

Borrowers committed to $26.40 billion of home loans in February, according to the most recent data from the Australian Bureau of Statistics. That was 1.5% higher than the previous month and 13.3% higher than the previous year.

The owner-occupier share was $16.87 billion, which was up 1.6% on the month before and 9.1% on the year before.

The investor share was $9.53 billion, which represented a 1.2% month-on-month increase and 21.5% year-on-year increase.

But while Australians are taking out more new loans, they’re refinancing fewer existing ones.

Borrowers refinanced $16.55 billion of loans in February, which was 3.0% higher than the previous month but 17.9% lower than the previous year.

Australia has hundreds of different property markets, which are often at different points in their cycle, so it’s common for there to be many markets where prices are increasing and many where they’re decreasing. Right now, though, the vast majority are in growth mode.

An analysis of 4,625 house and unit markets around the country by CoreLogic found that 88.4% experienced median price increases over the year to February 2024.

That compared to 52.9% in July 2023 and 39.1% in February 2023.

CoreLogic economist Kaytlin Ezzy said the reason prices had risen in most markets over the past year was due to an ongoing imbalance between housing supply and demand.

“Despite three rate hikes, worsening affordability, and the rising cost of living, the increasingly entrenched undersupply in housing stock, and above-average demand thanks to strong net migration, has helped push values higher,” she said.

Despite the rise in inflation and interest rates over the past two years, “nearly all borrowers continue to service their debts on schedule”, according to the latest Financial Stability Review from the Reserve Bank of Australia (RBA).

“Households with lower incomes, including many renters, have felt these budget pressures acutely,” the RBA said.

“Most mortgagors have experienced an increase in their minimum scheduled payments of 30–60% since the first increase in the cash rate in May 2022. Sharply higher housing costs (for borrowers and renters) and broad-based cost-of-living pressures have weighed heavily on the budgets of many households and contributed to very weak consumer sentiment.”

Nevertheless, borrowers have found a way to get by.

“While housing and personal loan arrears have increased since late 2022, they remain below their pre-pandemic peak,” the RBA said.

“At the same time, a small but increasing share of borrowers have requested and received temporary hardship arrangements from their lenders, which has contributed to arrears rates remaining a little lower than would have otherwise been the case.”

Property buyers are being forced to compete hard in many markets around Australia, so how can you improve your chances of securing your dream home?

Here are five tips to beat out other buyers:

Have a home loan pre-approval in place. This will make you look more attractive in the eyes of real estate agents, because it will position you as a serious buyer who can move quickly if their client accepts your bid.

Build good relationships with agents. Real estate agents work for vendors, not buyers, so they prioritise their clients’ interests. But if you can establish a good working relationship with agents – even while keeping some of your cards up your sleeve – they might favour your offer over those of other buyers.

Be realistic with your offers. If you’re buying via private treaty, avoid the temptation to begin with a lowball bid, otherwise agents will take you less seriously than the buyers who are making serious offers.

Make an offer before the auction. If you’re buying via auction, get ahead of the competition by making an offer before the auction. If your price matches what the agent expects to get at auction, they might tell their vendor to play it safe and accept your offer.

Be flexible around settlement. Tell the agent you’re willing to accept different settlement conditions (assuming that’s possible). This might include a short or long settlement, or a scenario in which you let the vendor rent the property for some time before you move in.

Hope you enjoyed our latest mortgage updates. In case you need any assistance with your home loan or refinancing, feel free to contact us. Subscribe to our newsletter for regular updates.

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