Surging Mortgage Applications
At its monthly meeting today the Reserve Bank Board decided to keep cash rates on hold, as many predicted, which will further fuel the strong demand for mortgages, which according to new research, is surging.
Statistics released by Equifax showed that over the March quarter demand for mortgages lifted by 23.5 per cent, continuing to outperform every other type of credit.
Demand for loans follows surging property prices, with the national median house price up for the second consecutive quarter for the first time since 2009, adding another 5.7 per cent in the first three months of 2021 – its steepest quarterly incline in almost 18 years – to reach a new record of $899,509, Domain’s latest House Price Report revealed.
Demand for mortgages grew throughout Australia, up 23.5 per cent compared with the March quarter 2020, with every state and territory experiencing growth.
Kevin James, general manager advisory and solutions at Equifax, said the market is showing a shift to asset-based lending, with mortgages and auto loans proving more popular than liabilities like credit cards and personal loans – as strong consumer incentives entice buyers to enter the market.
“Mortgage demand includes loans for new properties as well as refinancing. Historically, movements in Equifax mortgage application demand data have led changes in house prices by around six to nine months,” he said.
“Mortgage applications are not part of the Consumer Credit Demand Index but are a good indicator of home buyer demand and housing turnover.”
“Ultra-low interest rates are enticing more people into the market, but also an incentive for home-owners to refinance in the quest to find a better rate,” Mr James said.