June 18, 2024
Anthony Waldron, Mortgage Choice CEO:
“The Reserve Bank’s decision to keep the cash rate on hold at 4.35% in June follows weak annual economic growth over the March quarter 2024, primarily caused by persistently high interest rates.
“While borrowers and hopeful buyers are eager to see rate cuts, the Reserve Bank Governor has made it clear that tackling sticky inflation remains a priority. The June quarter Consumer Price Index will be key to informing the Reserve Bank’s future plans for the cash rate.
“With increasing speculation that home loan interest rates may not drop in the short term, borrowers continue to prefer variable rate loans. Mortgage Choice home loan submission data reveals that so far in June, 98% of submissions were for a variable rate home loan, with only 2% of loan submissions having a fixed component.
“Mortgage Choice submission data shows a 2% reduction in refinancing activity and 2% pick up in purchase activity over June so far. Refinance demand has fallen significantly over the past months as interest rates have increased and rates for new fixed-rate mortgages have generally remained higher than those for variable loans. With expectations that the RBA’s next move will be to reduce the cash interest rates, I would expect this low demand for fixed rate mortgages to continue.
“It’s a challenging time for borrowers and buyers navigating higher home loan repayments and tight supply in the housing market, which makes a mortgage broker’s advice critical. In a complex market, a broker’s expertise can help borrowers make confident decisions about their property plans.
“As the end of the financial year approaches, borrowers planning for the year ahead should take a moment to ensure their home loan is still the best option for their current circumstances.”
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