Refinancing has received a major boost following successive RBA cash rate cuts.
Data from the Australian Bureau of Statistics shows a 17% year-on-year rise in financing for the year to November 2011, and Loan Market COO Dean Rushton has predicted the trend is set to continue. Rushton said the company has itself experienced a 16% spile in refinancing enquiries over the past 12 months, and further rate cuts could continue to boost activity.
“With expectations of more rate cuts by the RBA in the first half of 2012, we should see sustained growth in the refinance market, which - along with first home buyers - will be the strongest sectors this year,” Rushton said.
Rushton said consumers held the “overwhelming sentiment” that rates would continue to move downward throughout 2012, a sentiment which should drive refinancing throughout the year.
“The key point for the refinance market has always been rates,” he said.
A rise in refinancing may be indicative of a trend of homeowners choosing to stay put rather than upgrade. A recent RP Data report has suggested a massive increase in the time homes are staying on market for many capital city council areas, and Mortgage Choice spokesperson Belinda Williamson said homeowners will have to weigh carefully whether upgrading is feasible in a stagnant housing market.
"Homeowners considering relocating also need to examine the costs associated with selling and buying, such as fees for real estate agents, advertising, legal advice, stamp duty, removalists, etc. Those with a loan may need to investigate if there are early repayment or discharge fees, if the loan can be transferred to the new property and if lenders' mortgage insurance is payable on the new property,” she said.
"It may be that for some homeowners the extra funds needed to purchase and relocate the family to a more ideal home could be better spent upgrading the existing property.”
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