A healthy mortgage season is expected this spring, with the value of property outpacing the number of home loans financed, according to a report by finder.com.au. 

The forecast holds promise despite three consecutive weekends of decreased auction clearance rates falling under 70%.

Moreover, the report draws information from the latest ABS Housing Finance data, which revealed that there were 54,323 home loans paid for in the month of August—a 4% decrease from July’s figure.

Finder.com.au predicted that the total number of home loans financed this spring would hit 168,482, which is 6,373 (around 4%) more than the previous year’s mortgage season. This forecast was based on another that used post-GFC data since 2010.

 “Interestingly, the value of total home loans financed this spring is expected to be $65.2 billion, up from $54.3 billion last mortgage season or an increase of $10.9 billion – 5-times the growth of volume of loans financed (20%),” said Michelle Hutchison, money expert for finder.com.au.

“This shows that many borrowers are clearly taking on more debt, with the national average mortgage size the biggest on record, hitting $371,200 in August. The growth is largely being driven by property prices going up at an increasing rate.

“CoreLogic PR Data shows an increase of 11% year-on-year from September (5 capital city aggregate), mainly lead by property in Sydney (+17%) and Melbourne (+14%).”

Hutchison additionally noted that existing homeowners are expected to make up a good portion of the home loan market for the coming season—around 85%.This is roughly two percentage points higher than the previous season.

Mortgage season usually experiences an increase in the number of first homebuyers in the market, Hutchison remarked. She pointed out that that this increase has jumped 3% from the previous season on average over the last 24 years of available data.

“We’re also seeing more borrowers and prospective home buyers comparing home loans on finder.com.au/home-loans, with a 24% increase in the number of Australians inquiring about home loans on the site in September since the previous month,” she added.

Hutchison warned that borrowers might be stretching themselves and should not take on too much debt while rates are low, as 60% of the industry’s experts (as surveyed by finder.com.au) believe that interest rates will rise next year.


 

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