Buyers Get Ready For Competitive Spring Real Estate Season

David McQueen, CEO of Loan Market

Competition is kicking in early ahead of the spring property season, with Loan Market recording a 53 per cent surge in home loan pre-approvals over July compared to a year ago.

The spike comes as buyers move to secure finance amid improving borrowing power and tighter stock levels.

Ray White data shows new listings are down 14.2 per cent compared to this time last year, adding pressure to an already competitive market.

With fewer homes available and interest rates easing, more buyers are getting their finances sorted early in preparation for the spring rush.

The uptick in pre-approvals comes as Loan Market Group released its National Mortgage Report which showed, even with rates easing, only 1 in 10 variable-rate customers had reduced their payments.

The vast majority are maintaining their current payments, effectively using the lower interest rates to pay down their loans faster.

David McQueen, CEO of Loan Market, expects pre-approvals to climb even further in the three weeks leading into spring if the Reserve Bank of Australia cuts the cash rate on Tuesday, which would mark the third cut in five Monetary Board meetings.

“Market listings are sitting at a three-year low, which is making it tough for buyers,”

McQueen said. “They’re looking for every edge and that starts with knowing exactly what they can borrow and afford to repay. “Buyers want to walk into an auction with confidence or put forward strong private treaty terms that help them stand out.”

If the RBA drops the cash rate by 0.25 percentage points, a buyer earning $120,000 a year could see their borrowing capacity increase by around $42,000 compared to the start of the year.

Across the states, buyers are readying themselves for September’s arrival, with pre-approvals rising across the board, year-on-year: - South Australia / Northern Territory - 80 per cent increase; - Western Australia - 79 per cent; - NSW / ACT - 49 per cent; - Queensland - 48 per cent; - Victoria / Tasmania - 46 per cent. Underlying inflation dropped to 2.7 per cent in the 12 months to the June Quarter, down from 2.9 per cent in the March Quarter.

“Inflation is heading in the right direction which has raised hopes of an August rate cut,” said Mr McQueen. “We’re expecting a rush of enquiries from buyers if the RBA follows market expectations.

"It will also bring more relief for mortgage holders who have been diligently meeting repayments while rates have been high.”