Brokers should be first port of call for refinancing advice
Anthony Waldron (pictured), chief executive of Mortgage Choice, has called on prospective homeowners to not be discouraged by the Reserve Bank of Australia (RBA)’s decision to hold interest rates at 4.1%.
As widely expected, the RBA chose not to follow up on February’s 25-basis-point cut on Tuesday, saying the economic outlook “remains uncertain”.
“Private domestic demand appears to be recovering, real household incomes have picked up and there has been an easing in some measures of financial stress,” the RBA said. “However, businesses in some sectors continue to report that weakness in demand makes it difficult to pass on cost increases to final prices. Sustainably returning inflation to target is the priority.”
Discussing the hold with MPA, Waldron said: “If you are in the market for a property, don’t be discouraged by the RBA’s decision to keep the cash rate on hold this month.”
He noted that the cash rate is expected to fall further this year, and while this could increase your borrowing capacity, “it will also increase competition from other buyers, which is why it's important to get advice from a broker so you’re prepared when you find the right property”.
Borrowers who haven’t had their home loan reviewed in over a year should call on their broker to determine if their current borrowing rate is still competitively priced.
“Your broker can quickly compare your current loan against what’s in the market and help you find the right loan for your needs,” said Waldron.
Refinancing, Alt Docs surge
Mortgage Choice has seen increased market activity since the February rate call, with borrowers rushing out to refinance their loans after most major banks passed through the 25-basis-point cut almost immediately.
“We saw an uptick in the number of borrowers looking to refinance over March, with the proportion of Mortgage Choice loan submissions for refinance rising month on month,” said Waldron.
Alongside refinancing deals, non-bank lender Assetline has also witnessed an uptick in 30-year Alt Doc loans and SMSF mortgages.
Touching on the RBA hold, Assetline’s general manager of distributions and partnerships Royden D’Vaz said: “With the general election nearing, we are not overly surprised that the RBA rate has remained.
“In February, Assetline was delighted to reflect the RBA rate decrease to our borrowers and since then we have seen an increase in scenario submissions across the country, especially with our 30-year long-term mortgages.
“Even with the RBA rate remaining, we encourage brokers to shop around to find the best solution to suit their customers.”
The story is the same across the wider non-bank lending space, with Bluestone Home Loans’ chief executive Mark Jones noting a “return to confidence to homebuyers after the February interest rate reduction”.
“We believe further rate reductions are appropriate through the remainder of 2025, reflecting increased global uncertainty and continued improvement in inflation in Australia,” Jones said. “Given the RBA did not move at this meeting, we believe a rate reduction is warranted and likely in May.”
What’s next?
The RBA will convene once again on May 20 to decide where to steer monetary policy next.
Westpac chief economist Luci Ellis is optimistic that the RBA will slash rates for the second time this year when the time comes, provided some encouraging inflation data is in the pipeline.
“Recall that the RBA’s February hawkishness stemmed from its view that trimmed mean inflation would get stuck at 2.7% if the Board followed the then market path and cut 3-4 times this year,” she wrote following the Tuesday hold.
“If inflation instead looks like settling closer to (or even below) the 2.5% midpoint of the RBA’s target range, this will give the RBA more room to reduce the restrictiveness of policy and even approach something like ‘neutral’.”
CommBank analysts also predict a cut in May, followed by another two before the year ends.
