Borrowers likely to set their eyes on variable loans

Variable rates are slated to be back in vogue next year as borrowers look for more flexibility.

BuyersBuyers CEO Doron Peleg said this year was characterised by a record demand for fixed-rate mortgages but the recent changes in the lending environment would pave the way for more borrowers to consider variable rate mortgages next year.

“2021 was the year of the first homebuyer and upgraders, but we expect investors to be much more active in 2022,” Mr Peleg said.

“Investors, in particular, like to have flexibility these days, and we’ve seen a sizeable increase in investor clients using offset accounts and redraw facilities.”

Latest figures from the Australian Bureau of Statistics (ABS) serve as proof on how investors are trying to widen their share in the property market.

Data covering lending transactions in October showed that the value of new loan commitments for investor housing reached $9.7bn, the highest level since April 2015.

This represents a growth of around 90%, with the number of investors accounting a third of all new loan commitments during the month.

Borrowers seek help from mortgage brokers

Mr Peleg said borrowers are increasingly depending on mortgage brokers for their home loan needs.

Citing data from the Mortgage & Finance Association of Australia, Mr Peleg said around 67% of home loans written over the past quarter were written by mortgage brokers.

“The advent of the internet and mortgage aggregators really helped to accelerate the use of mortgage brokers, helping consumers to understand the full array of choice in the mortgage market,” he said.

“There’s been fierce competition in the lending space, and it makes perfect sense for borrowers to get a mortgage expert on their side.”

Over the next few years Mr Peleg believes the overall share of mortgage brokers could hit as high as 70%.

“Mortgage brokers are now operating with a best interest duty as well as offering more choice and consumer convenience, which gives me even more confidence that mortgage broker market share will continue to rise,” he said.

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