RBA stays the course

September 07, 2021

The Reserve Bank of Australia (RBA) has decided it will keep the nation’s official cash rate on hold at 0.10%.

Speaking about the decision, CEO of Mortgage Choice and Smartline, Susan Mitchell said, “Against the backdrop of climbing COVID-19 cases and deteriorating economic outlook, the Reserve Bank has decided not to pull back stimulus and will continue its purchase of government bonds at the rate of $4 billion a week until mid February 2022."

“Loan preference data is also showing us that borrowers are seeking certainty in their monthly home loan repayments. Mortgage Choice monthly approval data reveals a growing trend towards fixed rates, with the proportion of borrowers opting to fix part of their mortgage steadily increasing throughout 2021. In August, 41% of all loans approved had a fixed component.”

“The uncertainty caused by the ongoing lockdowns is pushing borrowers to chase better deals on their home loan. Mortgage Choice home loan approval data shows a growing trend towards refinancing since March this year, with 42% of loans for the purpose of refinancing - this is slightly higher than 12 months ago where 41% of loans were for the purpose of refinancing,” said Ms Mitchell.

This is reflected in the latest housing finance data from the Australian Bureau of Statistics (ABS), which revealed that while new lending commitments slowed in July 2021, there was record growth in refinancing commitments over the month.

Ms Mitchell said, “Lockdowns in the nation’s two largest housing markets will likely put downward pressure on an already constrained supply this spring housing season.”

Realestate.com.au economist, Paul Ryan said, “Buyer demand remains very high, so there's a lot of people on realestate.com.au that are in the serious stages of buying and that hasn't really abated in these lockdowns, but what we have seen is seller activity has diminished.”

“A lot of sellers are reluctant to list their homes when they can't have a proper selling campaign and viewing inspections...and that's primarily affecting Sydney and Melbourne at the moment, but there is also some residual uncertainty in other parts of the country.

“While COVID-19 restrictions remain in place, housing market activity will continue to be subdued, but I see this as only a delay. So it’s a pause rather than a hibernation,” concluded Mr Ryan.

Ms Mitchell said, “Even though we haven’t seen marked changes to home loan interest rates recently I urge borrowers who haven’t had their home loan reviewed in over a year to speak to their local mortgage broker. The home loan market is very competitive, so you could be missing out on a better deal if you don’t shop around. A broker can easily compare your loan to thousands of products on the market to ensure you’re getting the best deal for your needs.”