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Prospective buyers are feeling more confident about home ownership as rate cuts in 2025 look more likely, a new report has found.
Survey responses from the latest Mortgage Choice Home Loan Report (1Q25) have revealed that the prospect of future rate cuts has fuelled confidence in consumers during the quarter.
According to Mortgage Choice CEO Anthony Waldron, prospective buyers were “feeling slightly more hopeful” during 1Q25 than they were the previous quarter at 46 per cent, up from 43 per cent.
Additionally, levels of anxiety dropped during this period, down from 39 per cent to 33 per cent. The report further found a shift in the impact interest rates were having on confidence, with fewer prospective buyers indicating that interest rates had made them less confident to buy, falling to 52 per cent in October from 62 per cent in June.
Survey respondents in Sydney were found to be the most impacted by interest rates, with 65 per cent stating their confidence was impacted compared to 50 per cent in the other capitals.
Waldron stated: “There are a couple of reasons why prospective buyers might be feeling more optimistic about their purchase plans.”
“With the cash rate on hold throughout 2024, home loan interest rates have remained relatively stable.
“We’ve also seen an increase in the availability of homes to buy, with the PropTrack Listings Report revealing that new listings in September 2024 reached their highest volume since September 2015, giving buyers more choice and more time in their purchasing journey.
“We asked survey respondents who identified as prospective buyers when they were hoping to buy, and 20 per cent said this summer, and 23 per cent said they were hoping to purchase in autumn 2025,” he said.
The report posited that interest rate drops are set to trigger more activity in the housing market as those looking to buy in 2025 are waiting out on interest rates or home prices to begin to fall before acting on their purchasing plans.
This was most pronounced in respondents living in Sydney (50 per cent) and Melbourne (48 per cent).
Waldron said if the Reserve Bank of Australia (RBA) decides to cut the cash rate early next year, we “may see the timing of these purchases brought forward”.
“Victorian property prices have been comparatively subdued in 2024, driven by home loan interest rates, a large volume of stock available for sale, and state government policies that have impacted property investment. A fall in home loan interest rates is likely to be a boost for the Victorian market,” he added.
Speaking to Broker Daily, Waldron commented on the role brokers have played, and will continue to play, in the market.
“We’ve seen mortgage broker market share continue to climb, with brokers writing over 73 per cent of new home loans in the June quarter this year.
“This growing market share is testament to the value consumers see in using a broker – including expert guidance and the ability to choose from thousands of loan products from multiple lenders.
“When home loan interest rates start to fall next year, our survey data tells us that consumers will feel more confident about purchasing property.
“We expect that a large proportion of these consumers will engage brokers to help put their plans into action. As rates drop, we can also expect to see borrowers looking for a better deal on their current home loan seek their broker’s help to refinance or negotiate with their existing lender,” Waldron concluded.
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