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Right place, right time for refinancing

Right place, right time for refinancing

Home loan refinance volumes are holding steady in spite of COVID-19.

Restrictions in place across the country as a result of COVID-19 have forced the property industry and consumers alike to adapt, creating an unprecedented market climate.

While predictably there are challenges, there are also opportunities for some segments of the market and homeowners.

Record low Reserve Bank interest rates and some very competitive home loan offers are helping to contribute to solid home loan refinance volumes.

The numbers

National refinance volumes have remained consistent over the past five weeks, with no significant deviation upward or downward observed.

CoreLogic data found that new home lending increased 4.6% in January 2020. In addition, data to 14 April also found that more than 75% of mortgage valuations ordered were for the purpose of loan refinancing (noting that this data includes top-ups, restructures and internal refinancing).*

This indicates that a sizeable number of borrowers in secure financial positions are eager to capitalise on the Reserve Bank’s rates.

Although COVID-19 presents logistical issues to a number of industries, property transactions continue to be processed digitally – uninterrupted.

Even before the outbreak, more than 97% of refinances were being completed digitally. Lenders and their clients benefit from swift lodgement and financial settlement ensuring the industry stays open for business.

These are encouraging signs for industry and consumers alike. It is clear that at least in the short term, the refinance market is holding firm, with transactions steadily ticking along in spite of COVID-19. But while the super low interest rates are a factor, what else is fuelling the appetite to refinance?

A highly competitive market

In recent months, lenders have responded by running generous offers, including cashback upon refinancing and other deals, along with some more liberal policies and requirements supporting consumer needs. Lenders are also engaging digitally, further increasing the propensity to refinance.

Brokers continue to play a role in the market and we’ve also observed a number of digital disrupters and neo banks providing consumers with further choice – and a service proposition built on providing value through extremely competitive rates alongside excellent service.

At a time when customer satisfaction and ease of doing business is paramount, consumers have been spoilt for choice when it comes to securing the best deal on their mortgage repayment.

What’s next?

Residential property is Australia’s most valuable asset class at $7.1 trillion** and history tells us that through previous economic shocks, the industry generally remains quite resilient.  

The months ahead will provide more clarity and while there will be challenges, there will be positives for property industry participants and the consumers they serve as we’re already seeing in the refinance space.

* Core Logic: https://www.corelogic.com.au/news/early-market-indicators-show-first-signs-housing-market-slowdown
** Data taken from CoreLogic March Property Market & Economic Update 2020 report

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