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ISCOVER
Staff Reporter
RateCity believes lenders are bracing for one of the toughest years to date and will have to boost their efforts in a bid to attract and retain borrowers.
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Australian Bureau of Statistics figures analysed by RateCity show annual home loan commitments increased 70 per cent from 430,486 in 1995 to a peak of 729,922 in 2007.
During the global financial crisis, home loan commitments dipped to 599,070 in 2008 and the mortgage market never recovered, with 2013 expected to have even fewer home loans financed.
RateCity spokesperson Michelle Hutchison said the peak levels of home loan activity in 2007 are unlikely to return any time soon and borrowers should take advantage of competitive offers and the opportunity to negotiate as lenders fight for market share.
“The home loan market has taken a blow since the GFC and we’re expecting 2013 to continue at this pace, with less than 600,000 home loans financed for the year,” she said.
“Interest rates are expected to fall further, which means borrowers are less likely to refinance because their repayments will drop, despite significantly lower rates often available to those who compare home loans and switch. Fewer government incentives for first home buyers will also mean there’s less appeal to enter the market.”
Ms Hutchison said some lenders are working harder to attract borrowers by offering incentives and easing their lending criteria.
“We are starting to see some competition with lenders reducing upfront fees. RAMS is the latest to cut its application fee for this month, valued at about $600. Other lenders that have cut upfront fees on some home loans during the past six months include AMP Bank, Yellow Brick Road and Gateway Credit Union,” she said.
“Some lenders are also offering no deposit loans such as RAMS (offering up to 120 percent LVR) and the latest from SGE Credit Union (up to 100 percent LVR) with conditions.”
