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

Monika Gudova

23 Nov 2018

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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 - rates updated daily

  • Promoted

    Newcastle Permanent

    2.59% p.a. variable

    2.63% p.a.

    $1234

    Product details Close details
    Special Real Deal Home Loan

    Enjoy a great low rate with no ongoing fees. Ability to split your loan between fixed and variable. 100% offset account. $2,000 cashback offer for investor & owner occupied home loans over $250k with LVR ≤80% when refinancing to Newcastle Permanent. Limited time offer, T&Cs apply.

    • 2.59% p.a. variable

    • 2.63% p.a.

    • $0

    • $0.00

    • $0.00

    • yes - free

    • yes - fees apply

    • yes - partial only

    • $0

    • 80.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • $2,000 cashback when you refinance your home loan from another financial institution when you apply by 30 November 2020, min $250k, LVR <80%

    Read our Mozo Review to learn more about the Special Real Deal Home Loan

  • Promoted

    Suncorp

    2.78% p.a. variable

    2.79% p.a.

    $1234

    Product details Close details
    Back to Basics Special

    No monthly account keeping fee, no ongoing annual fee and no loan establishment fee on new lending of $150,000 or more. Get a $2,000 cash bonus when you refinance with an eligible Suncorp Bank Home Loan of $250k+. T&Cs & eligibility criteria apply.

    • 2.78% p.a. variable

    • 2.79% p.a.

    • $0

    • $0.00

    • $350.00

    • Yes - free

    • first redraw per month free

    • no

    • $0

    • 90.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    • Refinance from another lender to receive a $2,000 cash bonus for loans of at least $250,000 or $3,000 bonus for loans over $750,000. Available for loans with an LVR <90% and applications made by 30 September 2020 and settled by 29 December 2020.

    Read our Mozo Review to learn more about the Back to Basics Special

  • Promoted

    Yard

    2.65% p.a. variable

    2.68% p.a.

    $1234

    Product details Close details
    Variable Home Loan

    Yard’s low-rate variable home loan is packed with all features – unlimited additional repayments, free redraw, 100% offset account. Enjoy a simple online application. Only a 10% deposit needed.

    • 2.65% p.a. variable

    • 2.68% p.a.

    • $835

    • $0.00

    • $500.00

    • yes - free

    • yes - free

    • Optional - $10 per month

    • $835

    • 90.00%

    • $150,000

    • $5,000,000

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Variable Home Loan

  • Promoted

    People's Choice Credit Union

    2.69% p.a. variable

    2.69% p.a.

    $1234

    Product details Close details
    Basic Variable Home Loan

    A People’s Choice Basic Variable home loan allows you to enjoy a simple, non-complicated home loan with a competitive rate and no upfront or ongoing fees. It also allows you to have the freedom to make extra repayments to pay off your loan sooner.

    • 2.69% p.a. variable

    • 2.69% p.a.

    • $0

    • $0.00

    • $350.00

    • yes - free

    • yes - free

    • no

    • $0

    • 80.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Weekly, Fortnightly, Monthly

    Read our Mozo Review to learn more about the Basic Variable Home Loan

  • Promoted

    Qudos Bank

    2.89% p.a. variable

    2.89% p.a.

    $1234

    Product details Close details
    Low Cost Home Loan

    The Low Cost Home Loan Package features low variable rates from 2.89% (2.89% comparison rate*) for owner-occupiers making principle and interest repayments, and has no application, legal or settlement fees.

    • 2.89% p.a. variable

    • 2.89% p.a.

    • $0

    • $0.00

    • $275.00

    • yes - free

    • yes - free

    • yes

    • $0

    • 80.00%

    • $150,000

    • -

    • Variable

    • Principal & Interest

    • Owner Occupier

    • Monthly, Fortnightly, Weekly

    Read our Mozo Review to learn more about the Low Cost Home Loan

*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 the amount and term you entered.

**Initial monthly repayment figures are estimates only, based on the advertised rate, and a loan of $500,000 repaid over 25 years. 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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