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A drop in home loan interest rates is fuelling renewed optimism among home buyers, according to the latest Mortgage Choice Home Loan Report.
The report revealed a 4 per cent increase in the number of Australians feeling optimistic about their property plans. Thirty-three per cent of survey respondents said interest rates have made them more confident to buy, up from 23 per cent the previous quarter, and a 20 per cent lift year on year. Just a year ago, 63 per cent of respondents said interest rates were negatively affecting their confidence.
At the same time, financial pressure on households is easing. The Australian Bureau of Statistics’ March quarter Consumer Price Index showed annual inflation has dropped below the Reserve Bank’s midpoint target range, helping alleviate cost-of-living stress.
Survey data reflected this shift, with fewer borrowers reporting they’re cutting back on discretionary spending, such as dining out, entertainment, or dipping into savings to meet their home loan obligations.
Half of those surveyed said they’ve improved their savings habits over the past year and 60 per cent are depositing more money into their home loan offset accounts.
The report also highlighted a growing trend towards proactive mortgage management, with 74 per cent of borrowers reviewing their home loan at least annually, and 87 per cent reviewing it at least once every two years.
Mortgage Choice CEO Anthony Waldron said: “It’s great to see that most borrowers aren’t taking a ‘set and forget’ approach to managing their home loan. With home loan interest rates expected to fall further over 2025, I’d encourage borrowers who haven’t reviewed their home loan in more than a year to chat to their broker to ensure they’re still on a competitive rate.”
Mortgage Choice’s submission data showed the national average loan size rose 8.1 per cent over the March quarter to $628,684. Western Australia recorded the highest growth in average loan size for the second consecutive quarter but still has the lowest average at $555,806. In contrast, NSW/ACT remains the region with the highest average loan size, increasing 8.8 per cent annually to $728,557.
Refinancing is also on the rise, with the value of refinance loans up 30 per cent year on year. South Australia/the Northern Territory led the country with a 44.3 per cent jump in refinancing activity.
Waldron said: “It’s unsurprising that refinance activity continues to grow given the Reserve Bank delivered a 25-basis point cut to the cash rate in February. If the RBA lowers the cash rate again at its May board meeting, we’re likely to see refinancing activity continue into the June quarter.”
Investment lending also surged over the March quarter, with the value of investment loans rising 18.5 per cent year on year. South Australia/the NT led with a 39 per cent jump, followed by NSW/ACT and Queensland, where investment loan values rose nearly 25 and 24 per cent, respectively. In all three regions, the growth in investment loans outpaced the increase in owner-occupied loans.
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