Lacklustre weekend auctions, but clicks suggest buyers loom with bigger pockets after RBA rate cut
It seems last Tuesday’s mild Reserve Bank interest rate cut has triggered the prospect of buyers with bigger pockets, but had no immediate impact on weekend auction buying numbers.
Melbourne’s weekend clearance rate stands at a provisional 53% with 72 of the 525 results yet to come. The previous weekend’s revised 50% was the poorest since 2004, according to the Real Estate Institute of Victoria.
Sydney’s weekend result was 55%, the same as the previous weekend, for which there is still an unknown 10% plus of results for both weekends.
But on the financing front Mortgage Choice’s website has experienced a 357% increase in unique page visits since Tuesday’s Reserve Bank’s decision to cut the cash rate.
Potential buyers’ interest in their borrowing capacity surged according to Australia’s largest independently owned mortgage broker, when compared with the preceding week in October.
The activity centred on Mortgage Choice’s ‘How much can I afford to borrow’ website calculator.
“The difference only one interest rate cut has made to our online calculator hits is impressive,” Mortgage Choice spokeswoman Kristy Sheppard says.
“It is terrific to see potential borrowers are on the ball with market condition improvements, already actively researching their new financial potential.
“It looks like the recent interest rate drop was the signal many buyers were waiting for to spur their property purchase plan into action.
“I’d say a number of them are especially eager to make a move now to take advantage of grants and concessions due to expire early in the new year.
“Lenders are poised to battle each other to attract and retain these market entrants, offering appealing interest rate discounts and other incentives.”
But Sheppard says borrowers may be surprised to hear that despite lenders’ willingness to loan money, the approval process involves much more than accepting a deposit from someone who can afford repayments.
“Applicants are required to have a healthy income and financial history, limited debt, a steady employment record and realistic expectations about their borrowing capacity.
“Attempting to cutting corners on these aspects of your property purchase will only hinder your hopes at loan approval,” Sheppard notes.
Wakelin Property Advisory director Richard Wakelin suggests the November rate cut was "too little too late" to rally this year's market.
"Buyer confidence has been severely dented. The cut is too little too late for this year, but buyers will be breathing easier going into next year," Wakelin adds.
