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Mortgage applications drop further
December 9, 2010
More and more Australians are putting off applying for home loans, especially in Queensland. But despite recent rate increases if you are in the market for a home loan your dream may still be possible.
According to Veda Advantage’s Consumer Credit Demand Index, the number of mortgage applications decreased for the third consecutive quarter. The report showed that home loan applications decreased by almost 24 percent during the September quarter compared to the same time last year. This was a further drop of 13 percent, in comparison to the June 2010 quarter.
Overall Queensland experienced the biggest year-on-year decrease of 32.4 percent while the smallest was Victoria which saw a rise in home loan applications by 17.4 percent.
Reasons for continuous decline
Since the beginning of the year the number of home loan applications has decreased and are now similar to numbers seen during the guts of the global financial crisis.
The cash rate declined rapidly from November 2008 and didn’t start to increase until September 2009 when of the number of applications peaked to nearly 65,000, according to Australian Bureau of Statistics (ABS) data.
“The record decline continues to be measured against the impact of the [federal] government stimulus package for first home buyers which inflated mortgage demand growth last year,” says head of consumer risk at Veda Advantage, Angus Luffman.
“Our latest Australian Debt Study Report reveals consumers are more frugal and appear to be watching their money far more closely … However, the survey indicates consumers have also taken on more debt over the past 12 months to invest in fixed assets such as property and home renovations.”
What does this mean for prospective borrowers?
While it would seem that many Australians are remaining cautious about applying for home loans especially as rates rise it is still possible to purchase your dream home and save. The good news is that you may still be able to get a good deal by getting in on the action and comparing home loans online to find a better deal.
For instance, RateCity calculated that the current average standard variable rate of more than 100 lenders is 7.3 percent (as at November 26), however one of the lowest home loans on RateCity is 56 basis points less at 6.74 percent by Newcastle Permanent. For a mortgage of $300,000 that is a saving of more than $100 in repayments each month and over $32,000 over a 25-year term loan.
Don’t let the rate rise deter you from following your dreams as you may be able to find a lower rate by shopping around.
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Disclaimer
This article is over two years old, last updated on December 8, 2010. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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