Latest / Early Edition with Ryan Bridge / Kelvin Davidson: Cotality Chief Property Economist on the rising number of mortgage holders swapping loan providers

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Kelvin Davidson: Cotality Chief Property Economist on the rising number of mortgage holders swapping loan providers · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Record numbers of us are refinancing our mortgages with a
• 0:03
  Speaker 1: new bank at the moment. Numbers from the Reserve Bank
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  Speaker 1: show more than three and a half thousand mortgage holders
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  Speaker 1: switched in the last year. This makes at the highest
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  Speaker 1: rate of refinancing since twenty seventeen. Calvin Davidson's Totality Chief
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  Speaker 1: Property Economists with me this morning. Calvin, good morning, Good morning.
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  Speaker 1: So how many are coming off fixed? You I have
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  Speaker 1: all the mortgage holders, how many are coming off our
• 0:24
  Speaker 1: fixed and the next we are.
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  Speaker 2: Yeah, it's quite a lot. So well, if you start
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  Speaker 2: with about ten and twelve percent of the loans, they're
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  Speaker 2: on flugging rates right now, and then if you look
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  Speaker 2: at perhaps the next six months, there's about another forty
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  Speaker 2: percent of debt that's on a fix rate now but
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  Speaker 2: due to rollover in six months. So by the end
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  Speaker 2: of the year we're going to have fifty five percent
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  Speaker 2: of loans seeing a rate change. And so yeah, there's
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  Speaker 2: there's quite a bit of flexibility there at the moment,
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  Speaker 2: and that's the thing people have, the flexibility cash backs
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  Speaker 2: are being offered. So thanks, switching is looking prettyppealing to
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  Speaker 2: people at the lone.
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  Speaker 1: Yeah, what are the deals that you've heard about people
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  Speaker 1: are getting.
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  Speaker 2: Well, sometimes those are heading a little bit behind the scenes,
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  Speaker 2: but few anecdotes a bit of personal experience, So it's
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  Speaker 2: I think it's very easily common to get sort of
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  Speaker 2: point seven point eight percent of the loan dull as
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  Speaker 2: a cash back up to certain caps. So it can
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  Speaker 2: be a decent chunk of money if you're looking at
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  Speaker 2: a fairly large mortgage. So it con cerdainly makes sense
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  Speaker 2: for people who are potentially under cash flow stress for sure.
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  Speaker 1: With fifty to fifty five percent, as you said, coming
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  Speaker 1: off by year end. At what point do these lower
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  Speaker 1: rates translate into higher prices for property?
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  Speaker 2: Well, yeah, so the market in general at the moment
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  Speaker 2: is we're calling it conflicting forces. So yes, ordinarily it'd
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  Speaker 2: expect that impact of lower Morgie rates to be pushing
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  Speaker 2: out house prices, and there's just a leg at the moment.
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  Speaker 2: I think that's reflecting the other side of the ledge
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  Speaker 2: of those conflicting forces, things like the weak economy and
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  Speaker 2: labor market. Even if people have kept their job, perhaps
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  Speaker 2: still not feeling as secure as they were, and so
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  Speaker 2: I think that's really holding things back. I think the
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  Speaker 2: second half of you could still be predy sejured for
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  Speaker 2: the market, but at those impacts of lower interest rates
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  Speaker 2: start to come through early next year, but even then
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  Speaker 2: it's unlikely to be a boom because there's still a
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  Speaker 2: supply out there and affordability isn't great. Better than it was,
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  Speaker 2: but still not great. So I think we're looking at
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  Speaker 2: a flatish market for a while.
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  Speaker 1: Calvin, what about the loan to value ratio limits? Are they?
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  Speaker 1: Are we getting close to? Are people getting close to
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  Speaker 1: that yet? What's the situation with that and is that
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  Speaker 1: potentially going to act as a ceiling on any future booms.
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  Speaker 2: I think the old is yeah, that's sort of doing
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  Speaker 2: this thing they're taking along. It's very tough as an
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  Speaker 2: investor to get a loan if you don't have a
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  Speaker 2: thirty percent deposit. Low deposit finance is more available for
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  Speaker 2: owner occupiers, but even then the limits aren't really being tested.
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  Speaker 2: I think the credit restraint that people are probably watching
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  Speaker 2: more closely is the debt to income ratios. Now, they're
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  Speaker 2: not necessarily doing too much either just yet, because test
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  Speaker 2: rates inside the bank's still high enough that that's what's
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  Speaker 2: kepting loan sizes. Those rates coming down is wide and
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  Speaker 2: mortar rates come down, and that's the point at which
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  Speaker 2: those formal get to income ratio rules will start to
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  Speaker 2: kick in. So I think that's the thing that probably
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  Speaker 2: limits the market over the medium term. And yeah, certainly
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  Speaker 2: another factor to Adam's that mix of I guess, a
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  Speaker 2: cautious outlook.
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  Speaker 1: Calvin appreciate that interesting stuff, Calvin Davidson, Totality, Chief Property Economists.
• 3:18
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