The Dot Update - September 2022
Welcome to this edition of the Dot Update..
Time to review your home loan is NOW
As interest rates rise, the number of homeowners refinancing their mortgages continues to surge.
Australian Bureau of Statistics figures show $17.9 billion worth of loans were switched to a different lender in July, following a record $18.2 billion in June.
A survey by digital property exchange PEXA shows many owners are taking advantage of the tactic of banks to offer better interest rate deals only to new customers.
Its survey of 519 homeowners who recently refinanced, or who intend to in the next two years, shows their main motivation is to save money.
More than one million Australians refinanced last year which on average resulted in a 0.4 percentage point reduction in their mortgage interest rate, which equates to a saving of about $1,524 a year on a $610,000 loan.
The savings for owners switching to a new lender was 0.5 percentage points, while those refinancing with their existing lender only achieved rates about 0.1 percentage points lower.
Migration Spike To Impact Property
Residential property markets will feel the flow-on effects of a Government decision to increase the permanent migration intake to 195,000 people per year.
The increase from 160,000 people a year before the pandemic is expected to put increased pressure on the already-strained housing market.
Rents are tipped to increase and some analysts believe there will be another surge of property price growth on the back of increased demand.
“Government needs a plan to rapidly deliver the affordable rentals needed to house any uplift in population,” she says.
Housing Markets Show No Sign Of Distress
The doomsayers may be predicting home-owners will struggle with rate rises but the data behind the market shows there is little sign of distress.
The number of homes listed for sale in August fell, which SQM Research managing director Louis Christopher says is an indication that owners are not under pressure to sell, despite price growth softening in some markets.
In August, residential listings fell 3.5% to 228,295 and new listings dropped 1.9%.
Christopher says higher borrowing costs may keep potential buyers out of the market but there is no sign rising rates are forcing owners to sell.
“The interest rate rises are deterring some buyers, but sellers are also being deterred from listing,” he says.
“Vendors are not really keen to list in this marketplace. There are no signs of any dramatic uplift in distressed sales.”
Analysis by comparison website Finder.com says recent rate rises have increased the average cost of a mortgage by $801 since April.
As always, we hope you enjoyed reading the blog and should you have any questions, please feel free to email Connecting@dotfinancial.com.au or you can call us on 1300 000 DOT (368).