Despite falling auction clearances, 2016 mortgage season will grow
Almost 170,000 Australians will take out a home loan this spring.
Don't let falling auction clearance rates fool you. The last quarter of 2016 will still see plenty of Australians dive into the traditional spring "mortgage season" and take out a home loan.
Projections by finder.com.au suggest that during spring, a total of 168,842 home loans will be financed. That's up 6,373 (4%) on spring 2014. The forecast is based on trends in home loans since 2010 (post-GFC).
The value of those loans will also go up significantly, hitting $65.2 billion. That's up 20% on the 2014 figure of $54.3 billion. That change is driven in large part by rising property prices. The national average mortgage was $371,200 in August (so if you've found a house you can buy while borrowing less than that, count yourself lucky). That said, the majority of those mortgages (85%) will go to existing homeowners looking to move.
High prices have had an impact on auction clearance rates, which have dropped in both Sydney and Melbourne. Borrowing larger sums may seem tempting given the current low official Reserve Bank rates, but those aren't going to stay low forever. A full 60% of experts in finder.com.au's Reserve Bank survey predict rates will rise next year, so bear that in mind when considering whether to choose a fixed or variable rate.
Picture: Anne Ruthman, licensed under Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (image cropped)