The Mortgage Choice Home Loan Report for the June quarter FY24 has revealed increasing optimism among Australians looking to enter the property market, with 83% of prospective buyers feeling positive compared to 70% last quarter.
“Buyers are recalibrating their perspective on interest rates... perhaps the right time to buy is simply when they’re ready,” said Mortgage Choice CEO Anthony Waldron (pictured above).
The report highlighted a significant divergence in the outlook and experiences of homeowners across different industries.
For instance, 65% of healthcare workers now expect it will take longer to pay off their mortgage, compared to 51% in professional services.
“The findings... highlight the divide between those working in professional services and those in other industries,” Waldron said.
Workers in professional services are notably more positive about their property purchase plans, with 52% feeling optimistic versus 43% in other sectors.
Despite the growing optimism, the report underscored a stark contrast between expectations and reality for many buyers.
Rising property prices and limited affordable housing are causing delays and forcing compromises, with 62% of buyers finding their search taking longer than expected.
The Mortgage Choice data showed 82% of prospective buyers are making compromises, such as purchasing in regional areas, downsizing, or opting for apartments instead of houses.
Additionally, 39% of current mortgage holders have had to delay significant renovations due to budget constraints.
Interest-only loans and investor activity rise
The Mortgage Choice report also showed a notable increase in the value of investment loans, up 20.7% year on year, and a 26% rise in interest-only lending over the June quarter.
“Our submission data reveals a rise in interest-only lending... which is expected given we also saw an increase in the value of loans to investors over the period,” Waldron said.
Despite a challenging economic climate, the national average loan size rose 9% year on year, driven by strong growth in regions like SA/NT, QLD, and WA.
Mortgage Choice data indicated a continued decline in refinancing activity for the second consecutive quarter.
“Even in a stable interest rate environment, it’s a good habit to meet with your mortgage broker at least once a year to review your home loan and discuss your plans,” Waldron said.
With the majority of fixed-rate refinancing now complete and fewer cashbacks available, refinancing levels have significantly dropped over the past six months.
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