Will banks be forced to slash home loan rates as buyer intention drops?

With shiny new homes boasting rustic charm showing up on the radar every day, and property prices falling lower than they’ve been in years, it may come as a shock that Aussies aren’t as keen to get a home loan as they were last year.

Research from Roy Morgan has shown that in the three months to October, 1.21 million Australians had the intention of taking out a home loan in the next twelve months, down 17.7% from the year before.

To put this in perspective, in October 2017, 7.3% of the population said they had the intention of taking out a home loan, which dropped to 5.9% in October 2018.

RELATED: Fed up Aussie borrowers dump banks in droves

The data revealed the main group driving these changes to be first home borrowers. In October 2018, 411,000 first home borrowers intended to take out a loan in the next 12 months, down 44.5% from the year before.

Roy Morgan Industry Communications Director, Norman Morris, suggested that without these prospective borrowers, banks could face difficulties in the coming year.

“The decline in home loan intenders over the last year is likely to have a major impact on banks in the coming year, particularly as the drop has come from first home buyers who are major generators of increasing volumes,” he said.

He suggested that the reduction in first home buyers likely had to do with uncertainty in the face of falling house prices, interest rate movements, mortgage stress and job risks.

Mozo Property Expert, Steve Jovcevski, agreed and suggested that rate cuts could be on the horizon as a result.

“It’s hard to shift the blame on any one thing, but it’s likely that a drop in those intending to borrow is a result of big and small banks alike hiking up their home loan rates in recent months, as well as announcements of tighter lending criteria,” he said.

“But what this means now is banks could possibly start looking at cutting rates as a way to attract borrowers in certain segments of the market.”

RELATED: All big 4 banks hike home loan rates - is now a good time to refinance?

In contrast, the largest group of Australians intending to take out a home loan in the next 12 months were was found to be refinancers, which accounted for almost half (45.4%) of the total group.

“For the same reason first home buyers are avoiding the property market, homeowners who have just had their rate hiked up are looking for a better deal on their mortgage,” Jovcevski said.

It’s never too early to start looking for a home loan, and if you’re one of the 1.21 million Australians on the hunt for a better mortgage rate, we’ve got some great offers lined up below to kick you off.

Nothing tickle your fancy? We’ve got over 500 home loans in our comparison tables, so you’re sure to find one that not only carries a great rate, but great features too.

First home loans - last updated 13 August 2022

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    interest rate
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    Initial monthly repayment
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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate, loan amount and term entered. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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