Stay informed on property finance trends, home loan options, and refinancing advice with My Finance Agent's monthly residential newsletter.
This month, we closely analyse what’s happening with home loans, while also sharing a surprising trend among property buyers:
Mortgage competition heating up
What is the average loan size in your state?
Why most borrowers are going variable
Read more below.
Lenders competing strongly for borrowers
Lenders are competing strongly for borrowers, especially those with strong credit profiles. As a result, borrowing activity jumped 18.2% between January 2024 and August 2024, according to the most recent data from the Australian Bureau of Statistics.
During that time, owner-occupier borrowing climbed 14.9%, while investor borrowing surged 23.7% and refinancing also increased, rising 1.2%.
If you have an existing loan and have not had it reviewed in the past two years, there’s a good chance a better deal might exist, or if you are in the market to purchase, please get in touch to find out.
We can help you:
Compare loans from a diverse range of lenders
Maximise your borrowing capacity
Choose a strategy and loan structure that suits your personal circumstances
Average loan sizes and how to pay it off faster
The average borrower is taking out a $636,209 home loan, with loan sizes ranging significantly in specific states, based on mortgage data from the Australian Bureau of Statistics. Check out the chart below for the figures:
Regardless of whether your mortgage is higher or lower than these figures, you probably want to reduce your loan balance. Here are some tactics to help you achieve that goal:
Switch from monthly to fortnightly repayments – this means you'll make the equivalent of 13 months of repayments each year
Use your offset account or redraw facility (if you have them), to reduce your interest bill
Refinance to a lower interest rate – there are really good deals available for borrowers who have at least 20% equity in their home
Schedule a My Wealth Strategy Service appointment to discuss a tailored approach to paying off your mortgage faster
All of those things really depend on your personal circumstances and financial position – so please get in touch if you want us to help you run some numbers.
Why 98% of borrowers are going variable right now
The vast majority of home loan customers are currently choosing variable-rate loans over fixed-rate loans.
In August 2024, 98% of new loans were variable, while 2% were fixed, according to the most recent data from the Australian Bureau of Statistics.
By comparison, in August 2021, when interest rates were at record-low levels, 46% of borrowers decided to fix, while 54% went variable.
Interest rate expectations appear to be guiding borrowers' decisions.
In 2021, when rates were at ultra-low levels due to the pandemic, most borrowers assumed they would rise sooner or later – so many chose to lock in those lower rates.
Today, most borrowers assume rates have peaked, so they want a variable loan that will get cheaper if and when the Reserve Bank of Australia starts reducing the cash rate.
Fixed vs variable
Fixed loans simplify budgeting, because your monthly repayments won’t change during the fixed period
As a result, you won’t suffer when rates rise and won’t benefit when they fall
Variable loans are unpredictable, because your repayments can change at any time
Variable rates go higher when rates rise and lower when they fall
Take the next step
Talk with one of our business finance experts who can guide you through the process and help find the best solution tailored to your needs.
Call us on (02) 8313-8400 or request a call back.
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