Lending update: August 2023

Another hold decision from the RBA for the second month in a row is increasing confidence amongst economists and consumers that we have reached the end of the interest rate hiking cycle. This confidence is apparently having a flow-on effect on the property market with some suburbs showing accelerated median price growth compared to Australia as a whole.

Since February, dwelling prices have risen 4.1% across Australia, however, Sydney alone has risen 7.6%. Many potential sellers are under the belief that the current is not a good time to sell due to a soft price market, however, once the news travels that property prices are up and demand is low, a flood of properties will likely come to ease the price hikes.

Refinance activity, driven by fixed-rate expiry and general price hikes, is still continuing in earnest. Lender assessment times have slowed as credit assessment teams struggle to keep up with demand, and an influx of junior credit assessors means that assessment in general takes longer.

A shift in client retention strategy from the lenders is evident across the board as lenders adapt to higher interest rates (with higher margins for them) and also a lack of cash-back to entice borrowers. In general, some lenders seem to be offering significantly better interest rates via their retention team for those clients who do ask, or for the broker that regularly reviews their clients’ lending.

The cash-rate outlook has been changing readily over the past weeks. The general consensus is that this seems to be the end of the ‘tightening cycle’ however the board has previously indicated they will be driven by the data so if consumers keep spending, the rates will keep rising.