Lendi Group says mortgage activity is surging as interest rates continue to rise.
The Reserve Bank of Australia increased the official cash rate by 50 basis points on Tuesday, taking the OCR to 0.85% in an effort to tackle rising inflation.
However, Lendi CEO David Hyman (pictured above) said Australians were rushing to review their interest rates with a significant increase in activity seen in the market following the first OCR rise in May.
“During the week of May’s RBA announcement, we saw a 32% increase in the total number of home loan enquiries on the Lendi platform, as compared to the four weeks leading up to the rate rise,” Hyman said.
“Additionally, in the 24 hours leading up to when the cash rate announcement was made, we saw an increase of over 113% in the number of refinancing enquiries on the Lendi platform from 2 May compared to 3 May.”
Hyman said the increase in enquiries indicated savvy Australians were starting to consider their refinancing journey sooner rather than later.
“With the current cash rate cycle – the first upward movement from the RBA in over a decade – we know there are hundreds of thousands of homeowners who may never have experienced an interest rate rise,” he said.
“With lenders acting faster to pass on a rate increase, Australians are moving quickly to inform themselves of their options in a changing market.”
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Combined Lendi and Domain Home Loans data shows existing owner-occupiers on principal and interest loans who considered refinancing now could save a median of $1,643 annually.
“For homeowners considering their options, reaching out to a local mortgage broker is a great place to start. Brokers are experts in finding and securing competitive rates and offering a personalised approach to meet their client’s needs,” Hyman said.
Eamonn Keogh (pictured), director of Melbourne business and commercial brokerage Duo Finance, said after Tuesday’s rate rise, the mortgage industry could expect to see a further decrease in demand from borrowers and a drop in their borrowing capacity.
“The latest ABS statistics show new loan commitments for housing in April 2022 dropped by 6.4%, compared to April 2021,” Keogh said.
“We know April is a shorter month peppered with public holidays, so we do tend to see a slight drop off. I think as a result we will see further slowing of lending with future interest rate rises predicted but we will have to wait and see.”
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Keogh said the ABS data (alongside Canstar data) found the average new home loan nationally was $623,000 on a variable interest rate of 2.98%.
“This is an increased monthly payment of approximately $170 per month, so with rates expected to continue rising, it will be interesting to see where we go from here,” he said.
Keogh said the interest rate increase would also impact the business space.
“Some business owners might use their assets such as their owner-occupied home or an investment property to support their business debts, so I am curious to see what impact today’s decision will have for business owners that require debt,” he said.
Keogh said as Australia was recommencing immigration into the country, the demand for housing would continue to increase.
“The demand pool will increase further as new people entering the country will need somewhere to live – I question whether it will offset the current market, we will have to wait and see,” he said.