According to ME’s general manager of home loans, while the economic concerns may still cast a shadow on positivity and dampen demand, the cost and availability of credit is improving – suggesting that there may be a “solid selling season” in spring.
Mr Bartolo said: “The property market notoriously blooms in spring, with more people listing their homes for sale and buyers ready to pounce.
“This year, many signs are pointing towards a solid selling season – the factors directly impacting cost and availability of credit are looking good, interest rates are at a record low, and market sentiment is improving.
“Auction clearance rates have also picked up in the past couple of months, so it will be interesting to see whether the trend continues when more stock comes on the market – that’s the biggest unknown going into spring.”
As such, Mr Bartolo said that he is “cautiously optimistic” of there being a “spring revival” in the housing market.
Noting that there may still be some uncertainty among households about jobs, concern over the cost of necessities and general worries about the economy, which “may impact their willingness to transact in property”, Mr Bartolo added that “the market conditions are right” and highlighted that ME’s latest Quarterly Property Sentiment Report has shown that respondents across all property status types have become more optimistic about house prices.
“Only 17 per cent expect prices to fall (28 per cent in Q2) and 38 per cent expect prices will rise (32 per cent in Q2) – perhaps reflecting a number of recent changes in the external environment,” he said.
“In terms of demand, there’s potential for more buyers to enter the market this year. With many banks, including ME, recently decreasing their serviceability floor rate and making credit more available to more Australians.
Mr Bartolo continued: “Investor activity is also expected to be higher than last year, given investors now have certainty about negative gearing and stamp duty policies. As a consequence, owner-occupiers and first home buyers can experience more competition.”
He concluded: “When it comes to sellers, many owner-occupiers have been taking a ‘wait and see’ approach, sitting on their homes until prices show signs of rising. With a couple of solid months of auction results and price rises, owner-occupiers might see spring as their chance to make a move. With conditions for buyers so strong, it does suggest more buyers in the market, so it’s also a good time to sell.”
ME cuts variable and fixed rates
The general manager of home loans made the comments as ME announced that it has made cuts to its variable and fixed home loan offers by up to 30 basis points.
The rate cuts will apply for both investment and owner-occupied home loans from Friday (6 September).
From today, the variable rate for a Flexible Home Loan with a Member Package (for owner-occupiers paying principal and interest with an LVR of ≤80 per cent and loan amount of $700,000 or over) will drop by 10 basis points to 3.29 per cent (3.73 per cent comparison).
According to the bank, this is the lender’s “most competitive advertised variable rate ever offered”.
Those with a Flexible Home Loan with a Member Package (for owner-occupiers paying principal and interest with an LVR of between 80 and 90 per cent for loans of $400,000 and over) will see rates drop by 30 basis points to 3.57 per cent (4.00 per cent comparison).
ME is also dropping the rate on its three-year fixed rate investment loans, with those paying principal and interest on loans with an LVR of up to 90 per cent seeing rates drop by 20 basis points to 3.48 per cent (4.25 per cent comparison).
Investors with a three-year fixed rate investment loan (≤80 per cent LVR) and paying interest-only repayments will also see rates drop by 20 basis points. This will bring the new rate to 3.69 per cent (4.18 per cent comparison).
[Related: Housing downturn stunts GDP growth]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.