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As the cash rate remains on hold, a digital lender anticipates an increase in customers looking to refinance or fix their rates.
Digital mortgage lender Tiimely Home, formerly known as Tic:Toc Home Loans, has said that it anticipates an increase in customers refinancing or fixing their interest rates on their home loans following the Reserve Bank of Australia’s (RBA) decision to hold the cash rate at 4.35 per cent earlier this week.
Belinda Jackson, Tiimely Home’s head of retail, said that the lender expects to see an increase in refinancing inquiries as rate cut predictions have been pushed further out, with all but one of the major banks predicting a rate cut in November 2023.
ANZ is the only major bank that has pushed its rate cut prediction into 2025, expecting a reduction in the cash rate in February next year.
The head of retail explained that many mortgage holders have been holding off on refinancing in the hope that the RBA would slash rates.
Jackson said: “In June, we’ve observed a shift in consumer behaviour among refinancers as they awaited the Reserve Bank of Australia’s (RBA) June meeting announcement.
“Many have been holding off refinancing, and with the decision to hold rates, we anticipate the same patterns we’ve seen in recent months, where individuals under financial pressure continue to seek out savings opportunities.”
Interest in fixed rates has also seen some movement, according to Jackson, as customers become hesitant about when rates will be cut and rising speculation that rates will increase further.
Indeed, the ASX’s RBA Rate Tracker has shown an uptick in the market expecting a rate rise, with 15 per cent of the market predicting an increase in rates to 4.6 per cent as of 19 June. As of 17 June, prior to the RBA’s decision to hold the cash rate, the market predicted a 100 per cent chance of the cash rate holding.
Tiimely’s head of retail said that customers may look to fix their interest rate over the next 12 months (or more) to avoid potential rate increases.
She said: “While you’re waiting for the interest rates to decrease, if you can get on a sharp fixed rate, there’s potential for savings now rather than waiting and paying at a higher rate until midnext year so this is one way people may look to save money.”
Jackson added that there was an increase in the number of first home buyers, with Tiimely reporting an 8.62 per cent increase in FHBs applying for investor home loans in 2024, compared to 5.87 per cent in 2023.
She said: “From a purchase perspective, there is a fear of missing out and wanting to benefit from rates being on hold for longer so we may see people jump into the market more quickly.”
There has also been strong growth in the ‘rentvesting’ trend, Jackson said, adding that now is a “good time” to join the trend.
The head of retail said: “Entering the housing market is challenging for many people so purchasing an investment property in a more affordable location can be a great way to start building your wealth portfolio in property.”
She continued that it would be “interesting” to see what happens to property prices as interest rates continue to hold.
Customers would look to digital lenders to refinance, according to Jackson, as Australians become more digitally savvy and look for fast service and competitive rates.
She said: “Customers will look at any strategy including refinancing, renegotiating with their current lender or looking at opportunities around fixed rates to help alleviate cost-of-living pressures.
“Digital lenders tend to offer better economics to the customer because there’s less cost to serve.”
Timely rebranded from Tic:Toc Home Loans in November last year and launched its in-house broking service with salaried, in-house brokers, in collaboration with aggregator AFG.
[Related: 2024 rate cut hopes dwindling]
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