Rateseeker December 2022 Property News Round-up
2022 has proven to be a challenging and dynamic year for the property market with the Reserve Bank of Australia delivering a series of rate hikes to combat inflation which in turn has had a huge effect on interest rates, housing affordability and household budgets across the country.
With property prices in ever median capital falling in recent months, experts believe that most cities will see a return to growth in 2023 with a series of forecast based on different scenarios.
Australia has just lived through the biggest 6 months in refinancing history with a huge amount of borrowers bailing out of their home loans for a better rate elsewhere, in turn saving them thousands in the long-run.
Fixed rate home loans are currently not an attractive offer for most borrowers, where earlier prior to April nearly half of all borrowers were fixing their interest rates.
There’s nothing like having a great mortgage broker, and 7 in 10 Aussies are now using a mortgage brokering service to ensure they’re getting a great deal for their money instead of taking out loans directly with the big banks.
Missed the latest property news? Don’t miss out, here are the biggest stories below.
Property prices plunged in 2022, but are set to rise again in 2023
The property market has evolved significantly over the last 12 months of 2022.
In the year to November 2021, the national median property price increased by 22.2%, according to CoreLogic. But in the year to November 2022, prices dropped 3.2%.
A few capital cities actually recorded price growth in the year to November 2022:
- Adelaide +13.4%
- Darwin = +5.5%
- Perth +3.9%
- Brisbane +3.3%
However, prices declined in the other capitals across the country:
- Canberra -1.3%
- Hobart -4.1%
- Melbourne -7.0%
- Sydney -10.6%
Nevertheless, every capital city’s median price declined in the three months leading up to November this year, suggesting all markets are going backwards at this current time.
SQM Research however, believes that most cities will bounce back to growth mode in the new year.
Providing four different forecasts, based on different circumstances around interest rates, inflation and unemployment. Under the ‘base case’ scenario, SQM has revealed their prediction in the following price changes by city:
- Sydney +5% to +9%
- Perth +4% to +8%
- Melbourne +1% to +5%
- Brisbane +1% to +5%
- Adelaide 0% to +5%
- Hobart -1% to +3%
- Canberra -3% to +2%
- Darwin -5% to 0%
Thinking of buying a property in the new year? Get in touch with us at Rateseeker, we can help un-complicate the process and help you find out how much you can borrow so you can get into your dream home fast.
The last 6 months have been the biggest in history for refinancing
The latest data from the Australian Bureau of Statistics has revealed that plethora of borrowers are refinancing their home loans since April this year.
Australians refinanced $17.8 billion of mortgages in October – just shy of the $18.6 billion refinancing record that we hit in August.
Nevertheless, the recent data reveals that the past six months have been the six biggest months in refinancing history, with more Aussies looking for a better deal on their loans than ever before.
One of the main factors responsible for so many borrowers refinancing right now is because many lenders are charging lower interest rates to new borrowers than loyal customers, as shown by Reserve Bank data.
In October, owner-occupiers who sought out new variable loans were charged, on average, 0.51 percentage points less than owner-occupiers with existing loans.
This is why refinancing to a comparable lower-rate loan could potentially save you tens of thousands of dollars over the life of your loan. Get in touch with our expert brokers at Rateseeker and we can help explain the pros and cons of refinancing, crunch the numbers and see how much you might be able to save by switching loans at a sharper rate.
Aussie borrowers currently in favour of lower-rate variable loans
Compared to a year ago, where nearly half of all borrowers were fixing their loans, now only very few borrowers are choosing to do so.
Since the most recent data collected in October 2022, only 4% of borrowers fixed their loans (both new loans and refinances), according to the Australian Bureau of Statistics.
On the other hand, a whopping 44% of borrowers chose to fix their loans in October 2021 and 46% in August 2021 (when fixing peaked).
While the Reserve Bank only started increasing the cash rate in May 2022, lenders anticipated the increases, so as a reactive measure they had already started raising interest rates on their fixed-rate loans. As a response, borrowers had begun shifting towards lower-rate variable loans.
This has been confirmed by RBA data on new owner-occupied loans.
In October of last year, the average interest rate on a new fixed loan (with a fixed period of three years or less) was 0.63 percentage points lower than a new variable loan.
By February of this year, new fixed loans had increased 0.09 percentage points, then by May 2022 it had skyrocketed a further 0.70 percentage points.
That has since declined – by October, fixed loans were only 0.30 percentage points dearer.
Are you a first home buyer looking to buy your dream home? Get in touch with our team of expert brokers or visit our website to compare over 1000+ from 30+ lenders loan options to determine if you should choose a fixed or variable home loan.
More than 70% of Aussies prefer using a trusted broker
An ever-growing majority of Aussie borrowers are taking out home loans with the help of a trusted mortgage broker, rather than going direct-to-lender. It’s no surprise in the current property and financial landscape that borrowers are choosing to work with a trusted broker to navigate their way to the sharpest rates.
According to research group Comparator data has revealed that between July and September 2022, mortgage brokers facilitated 71.7% of all new residential home loans – a record share.
Compared to 66.9% the year before and 60.1% the year before that, it’s clear that the services and benefits of working with a great broker can help home buyers get outstanding results in the long-run, as well as the guidance and help during the stressful application process.
Anja Pannek, the chief executive of the Mortgage & Finance Association of Australia, which commissioned the research, said the result highlighted the trust and confidence that consumers have in mortgage brokers.
Looking for your first or next home? We’re experts at finding the right home loan for you. Get in touch and speak to one of our experienced mortgage specialists for personalised help, guidance and the sharpest rates for your home loan.
** General Advice Warning
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