Latest / Early Edition with Ryan Bridge / Kelvin Davidson: CoreLogic Chief Property Economist believes a change in home loan borrowing habits is occurring

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Kelvin Davidson: CoreLogic Chief Property Economist believes a change in home loan borrowing habits is occurring · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Core Logic is forecasting borrowers will fix for longer as
• 0:03
  Speaker 1: mortgage rates come down. Ninety percent of home loans we're
• 0:06
  Speaker 1: floating or fixed for less than a year in January,
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  Speaker 1: but as rates get more affordable, homeowners are fixing for longer.
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  Speaker 1: Core Logic Chief property economist Calvin Davidson is with us now.
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  Speaker 1: Good morning, Calvin, Good morning. So you're seeing evidence of
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  Speaker 1: this that people are fixing for longer.
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  Speaker 2: Yeah, it's anecdotal at this point. We don't actually have
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  Speaker 2: the hard figures on it. I'm expecting in a couple
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  Speaker 2: of weeks we get February's data from the Reserve Bank,
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  Speaker 2: I'd expect that I'll probably start to show that trem because,
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  Speaker 2: of course, in February we saw some pretty you know,
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  Speaker 2: pretty intense competition re emerge that those two and three
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  Speaker 2: year horizons, those fixed rates, the Bank's really got competitive
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  Speaker 2: for those rates in February. So once we get their data,
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  Speaker 2: I think we'll see it in the facts. But right now,
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  Speaker 2: saving the anecdotally hearing from people that those two and
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  Speaker 2: three year rates are starting to get more popular again.
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  Speaker 1: So when do you expect we will see a solid
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  Speaker 1: switch to long fixing.
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  Speaker 2: Well, I mean, I think it could happen fairly quickly
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  Speaker 2: and once once you're start to get those two and
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  Speaker 2: three year rates below five percent, that's getting pretty appealing,
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  Speaker 2: and particularly with the uncertainty around the world with various things,
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  Speaker 2: people might just be starting to think, Okay, I wouldn't
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  Speaker 2: mind some certainty over that two or three year period.
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  Speaker 2: So I mean, no guarantees. We've seen a lot of
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  Speaker 2: popularity for those shorter term fixes lately and may not
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  Speaker 2: shift overnight, but you can certainly see the appeal of
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  Speaker 2: those rates below five.
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  Speaker 1: Percent, the low rates, the competition. What impact will this
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  Speaker 1: have on the property market.
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  Speaker 2: I mean, well, we're already seeing the property market more
• 1:39
  Speaker 2: generally start to turn around. It's it's fairly slow progress,
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  Speaker 2: and it's been a pretty deep downturn. It's it's been
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  Speaker 2: quite prolonged. But we've seen before the impact that lower
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  Speaker 2: mortgage rates can have, and I think that's starting to
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  Speaker 2: come through now. We've seen sales rising for probably a
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  Speaker 2: year or so. It's been it's been slow and from
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  Speaker 2: a low level, but sales are rising and we still
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  Speaker 2: house prices start to take up again in February, so
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  Speaker 2: I think we're seeing that evidence now but the game,
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  Speaker 2: there's probably reason for a restraint because at the same time,
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  Speaker 2: there's still a lot of less things. The economy is
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  Speaker 2: still a bit weak, there's a restraint in terms of
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  Speaker 2: so debt to income ra share restrictions from the reserve banks.
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  Speaker 2: So there's support effectors, but also things that are restraining
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  Speaker 2: the market too.
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  Speaker 1: And is it benefiting or encouraging investors.
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  Speaker 2: Yeah, we're definitely seeing investors coming back. That's been a
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  Speaker 2: trend for probably about nine months now. They reached to
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  Speaker 2: trough in terms of their bucket share at least about
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  Speaker 2: sort of April May last year, and then since then
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  Speaker 2: the text rules had gone a little bit easier for investors,
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  Speaker 2: and of course mortgage rates had come down, so that's
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  Speaker 2: really helping to reduce those top ups that most investors
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  Speaker 2: would require for a new rental purchase, so in other words,
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  Speaker 2: topping up the cash flow from other sources of income.
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  Speaker 2: As mortgage rates come down, those times ups come down,
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  Speaker 2: and so yeah, there's evidence that investors are coming back
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  Speaker 2: as those cash flowers improve. So I think probably a
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  Speaker 2: busier year for investors this year too, Cavin, Is.
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  Speaker 1: This a sign that interest rates are about as low
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  Speaker 1: as they're going to get for the next few years.
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  Speaker 2: Well a million dollar question, ayes. Yeah, and you know
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  Speaker 2: there's no financial advice or anything here, but I mean
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  Speaker 2: we've I think we probably have seen the biggest falls
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  Speaker 2: and mortgage rates from his face that they've come down
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  Speaker 2: pretty sharply in a recently short period of time, and
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  Speaker 2: they're not they're very unlikely to go back to those
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  Speaker 2: those COVID levels. So yeah, I mean, once we start
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  Speaker 2: to get rates in that four and a half to
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  Speaker 2: five percent kind of range, which is what we've got now,
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  Speaker 2: you'd have to think that's getting fairly close to the bottoms.
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  Speaker 2: So yeah, so big decisions for people.
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  Speaker 1: Thank you, Calvin, appreciate your time this morning. That was
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  Speaker 1: Calvin Davidson, Core Logic, chief property Economist. For more from
• 3:56
  Speaker 1: Early Edition with Ryan Bridge.
• 3:58
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