By
Australia's loan markets are buzzing.
That's the latest from Mortgage Choice. The Australian brokerage giant released its quarterly report this week, "Navigating the path to the Great Australian Dream in 2025", showing that the demand for investment loans, new property loans and refinancings were all on the rise, despite higher-for-longer interest rates, supply shortages and rising prices.
But Mortgage Choice CEO Anthony Waldron (pictured) said the markets are a reflection of consumer sentiment, which has improved in recent weeks thanks to increased hope for near-term rate cuts.
"Consumer confidence plays an important role in the property market, as it can determine whether people are more likely to list their homes for sale, or make an offer to buy property," Waldron said.
"As speculation mounts that home loan interest rates could start to fall in the first half of 2025, prospective buyers are feeling more confident about their purchase plans.”
In fact, the current macro environment seems to have created a renewed sense of optimism around Australia. The National Bank of Australia (NAB) was the last of Australia's four big banks to update its predictions on interest rates. At present, all four banks are anticipating the Reserve Bank of Australia (RBA) will slash the official cash rate at its meeting later this month, after January's consumer price index (CPI) indicated that inflationary pressures are on the downturn.
Mortgage Choice has similar findings.
In the December quarter, loans to purchase – both homes and investment properties – rose 15.6%, year-over-year. That's on top of a 21.6% jump in the previous quarter. Loans to refinance were also on the rise, up 10% in the quarter, year-over-year, a reversal from the previous three quarters. Waldron said refis will likely continue to grow in demand if rates come down.
Loans for owner-occupied dwellings were up 10% in the quarter, year-over-year. Meanwhile, investment loans continued to gain traction. Australia's investment loan market increased 23.9% in the quarter, year-over-year, on top of a nearly 29% rise the quarter before.
Queensland and Western Australia continue to be dominant hotspots for investment properties.
And among those looking to buy in 2025, 23% said potential interest rate cuts have increased confidence, up from 17% last quarter.
While borrowers face many obstacles in today's economy when applying for a loan, Waldron said there's still room for optimism.
“Owning a home has long been the Great Australian Dream," he said. "Australians still see property as key to building their wealth."
That's good news for brokers who help roughly three-quarters of homeowners and a third of commercial property owners with the process. Waldron is among those who advocate for using a broker.
"Purchasing a property can be a daunting process, especially for those who’ve never done it before, which is why it’s so important to speak to a mortgage broker early in the process," he said. “A broker will help buyers understand their borrowing capacity so they can refine their property search and bid at auction with confidence. And, when they’re ready to apply for a home loan, brokers will guide them through the process from application through to settlement.”
At the same time, brokers can benefit from understanding what their clients are thinking. Among the many findings, Mortgage Choice surveyed 1,000 potential borrowers around Australia and found their biggest concerns – regardless of demographics – were centered around housing affordability.
In fact, 66% of Gen Z-ers, 58% of Millennials, 57% of Gen X-ers and 68% of Baby Boomers said making housing more affordable was their number-one priority when taking out a loan. Other issues included supply of homes, tax incentives, support for purchases and rent caps.
“Although sentiment is on the rise, it is clear consumers are facing hurdles on their journey to property ownership," Waldron said. "To me, this says borrowers could be missing an opportunity to lower their repayments simply by reviewing their loan."
