The recent announcement by the Reserve Bank (RBA) to maintain interest rates at 4.35% is expected to drive an increase in fixed rate and refinance home loans, according to online digital home lender Tiimely Home.
Formerly known as Tic:Toc Home Loans, the company foresees a surge in customer activity in response to the stable rates.
Belinda Jackson (pictured above), Tiimely Home’s head of retail, noted a slowdown in the refinance market due to uncertainty over RBA’s decision.
“In June, we’ve observed a shift in consumer behaviour among refinancers as they awaited the Reserve Bank of Australia’s June meeting announcement,” Jackson said.
“Many have been holding off refinancing, and with the decision to hold rates, we anticipate the same patterns we’ve seen in recent months, where individuals under financial pressure continue to seek out savings opportunities.”
She highlighted the anticipation of increased refinance enquiries with the speculation that interest rates won’t fall until next year.
“When we’ve seen this consistent behaviour from the RBA, we benefit from seeing more inquiries around refinancing as consumers seek out market-leading rates,” Jackson said.
There has also been a noticeable shift in the demand for fixed rate home loans.
“Customers are finding it more challenging and don’t want to be hit with any more rate rises so they may look to fix their interest rate for the next 12 months or longer,” Jackson said.
“While you’re waiting for the interest rates to decrease, if you can get on a sharp fixed rate, there’s potential for savings now rather than waiting and paying at a higher rate until mid-next year so this is one way people may look to save money.”
Tiimely Home predicts continued growth in the investor market, reporting an 8.62% increase in first-home buyers applying for investor home loans in 2024, up from 5.87% in 2023.
“From a purchase perspective, there is a fear of missing out and wanting to benefit from rates being on hold for longer so we may see people jump into the market more quickly,” Jackson said.
She also noted the trend of rentvesting, where individuals buy investment properties in more affordable locations to start building their wealth portfolios.
As Australians become more financially savvy, there is a growing shift towards digital lenders offering competitive rates and fast service.
“Customers will look at any strategy including refinancing, renegotiating with their current lender or looking at opportunities around fixed rates to help alleviate cost-of-living pressures," Jackson said.
She stressed the advantages of digital lenders like Tiimely Home, which offer better economics due to lower operating costs and faster decision-making processes.
Jackson warned customers to be cautious of aggressive retention policies by major banks.
“We have seen aggressive behaviour from many lenders from a retention point of view,” she said.
“These lenders will have to try and close that margin gap and I expect when the RBA cash rate starts to drop, some of that margin will be held. In terms of passing on those rate reductions, they may take longer or choose not to in some cases so that’s something for consumers to be aware of.”
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