Home loan market shows signs of life as variable rates hit 1.95%

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New home loans have partially recovered from their record decline last month, according to ABS figures released today. This comes as mortgage rates continue to fall, with a new floating rate being the lowest 1.95% currently on the market.

ABS loan indicators

The latest ABS figures show that the value of new loans rose 6.2% in June, following a record decline in May. Compared to pre-COVID conditions (February), new loans were still down 10.4%, in seasonally adjusted terms.

The number of people refinanced fell 11.1% month-over-month following a record increase in May. However, compared to February, refinancing increased 23.8% and 52.1% compared to June of last year.

Value of new loans % cash % cash
June 20 May 2020 – June 2020 June 2019 – June 2020
Total accommodation

$ 1.01 billion

$ 747.40 million

$ 17.43 billion

6.18%

4.48%

Owner occupants

$ 679.80 million

$ 1.03 billion

$ 12.99 billion

5.52%

8.65%

Investors

$ 333.9 million

– $ 287.40 million

$ 4.44 billion

8.14%

-6.09%

Notes: Seasonally adjusted figures. Figures exclude refinancing.

Source: ABS loan indicator statistics for June 2020, published on August 5, 2020.

External refinancing % cash % cash
June 20 May 2020 – June 2020 June 2019 – June 2020
Number

19,327

-11.05%

52.11%

Value

$ 8.90 billion

-11.90%

73.99%

Notes: Based on number and value of new homeowner loans using seasonally adjusted figures.

Source: ABS loan indicator statistics for June 2020, published on August 5, 2020.

The June data largely reflects changes in the mortgage market in May, as new sales typically take six weeks to settle.

RateCity’s research director Sally Tindall said the increase in new loans this month showed there were still signs of life in the real estate market despite the turmoil, but the outlook was still uncertain. .

“Last month we saw the biggest drop in new loans on record due to the nation’s foreclosure,” she said.

“It’s no surprise to see new loans rebound in June, as restrictions began to lift on auctions and homes opened in May. However, with Victoria’s return to lockdown and hundreds of new COVID-19 cases emerging every day, the long-term trend for the housing market is still expected to be on the downside.

Current variable rates have reached 1.95%

The low-cost lender, Easy Street Financial, outperformed its competition with a continuous variable rate of 1.95% and a comparison rate of 1.99%.

The rate is available to homeowners who pay principal and interest on loans of $ 750,000 or more, with a deposit of 20% or more.

Sally Tindall, Research Director at RateCity.com.au, said: “Mortgage rates continue to fall as low-cost lenders continue below 2%.

“It’s unusual to see so many rate cuts when the RBA hasn’t and isn’t likely to change rates anytime soon. Yet every week records are broken.

“This competition between banks motivates people to change lenders. Today’s ABS figures show a 73 percent increase in external refinancing compared to June of last year.

“There are now four mortgage lenders offering at least one rate below 2% and the list is growing every week,” she said.

Lowest rates in the RateCity database

Lowest current variable rates

Lowest 1-year fixed rates

Lowest fixed rates over 2 years

Lowest 3-year fixed rates

Notes: Rates above apply to homeowners paying principal and interest.


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