Borrowers cautiously optimistic amid challenges

New report insights

Borrowers cautiously optimistic amid challenges

A significant 78% of borrowers have had to make lifestyle sacrifices to manage their home loan repayments, according to the latest findings, according to the inaugural edition of the Mortgage Choice Home Loan Report.

The report provides a comprehensive overview of Australia's current mortgage borrowing landscape, utilising data from more than 1,000 brokers and a national survey of 1,000 consumers to highlight borrower sentiment, trends, and market activity for the March quarter.

According to the Mortgage Choice report, common cutbacks include less dining out (54%), reduced entertainment spending (50%), and postponing vacations (34%).

“Consumers are telling us loud and clear that they’re still feeling the pinch when it comes to keeping up with home loan repayments,” said Anthony Waldron (pictured above), CEO of Mortgage Choice.

Rising interest in property despite economic headwinds

Despite ongoing economic challenges, the property market is experiencing a resurgence of interest, with 57% of potential buyers indicating plans to purchase in 2024. This optimism is supported by a 17.5% increase in the value of purchase submissions compared to the previous year.

“Our brokers are reporting a sense of cautious optimism from customers motivated to act on their property plans,” Waldron said.

Refinancing activity slows as market stabilises

The report documents a significant 26% drop in refinancing activity year-over-year, influenced by stable interest rates and stringent lender policies.

“In this market, with higher home loan interest rates and rising property values, it has become difficult for some customers to refinance,” Waldron said.

He further noted the shift from fixed-rate to variable-rate mortgages as fixed rates climb, pointing out, “It’s not surprising that more borrowers are choosing variable rates.”

Generational divides and future outlook

The generational gap is apparent in property engagement, with Gen Z showing the least confidence and Boomers largely indifferent to interest rate changes.

However, the overall mood among prospective buyers is improving, with many feeling positive about future property purchases despite the rising cost of living.

Our brokers in Perth are reporting that their market has been reinvigorated over the last year, driven by a more stable interest rate environment, high demand,” Waldron said.

To read Mortgage Choice’s home loan report in full, click here.

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