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New data released by Connective has revealed a significant rise in the volume of borrowers preparing for future property purchases. Nearly a third of all loan applications in February were pre-approval applications, marking the largest proportion since February 2021.
In total, 27 per cent of all applications from Connective brokers in February were for pre-approval. This represents a nearly 30 per cent increase year on year and more than a 50 per cent rise compared to February 2023.
Connective CEO Glenn Lees said the increase in pre-approval applications is a strong indicator that more borrowers are likely to enter the market in the short term.
“Although it remains uncertain whether this will directly lead to higher settlements, it does signal growing confidence in the lending market,” he said.
While recognising that there is a degree of seasonality in the data, with February historically being a peak month after slower periods in December and January, Lees said that this February stands out as the highest proportion of pre-approvals seen in years.
“Certainly since 2021, when the world opened up again post-COVID,” he said.
The proportion of pre-approvals or Approval in Principle (AIP) loan applications offers a strong early indicator of borrowing intent.
When pre-approvals rise to nearly 30 per cent, compared to 21 per cent at the same time last year or 15 per cent in June 2023, it signals increasing confidence among borrowers, according to Connective.
Despite this positive trend, Lees reminded brokers to consider the broader economic picture and continue to engage clients, regardless of rate movements.
“Our pre-approval data indicates that borrower’s appetite to jump into the property market is increasing and the recent rate cut is likely to fuel that further,” Lees said.
“But the reality is more nuanced; increased demand will inevitably increase property prices. Overlay the pressures of a cost-of-living crisis on household budgets, and it could remain just as difficult for many homebuyers to get pre-approval.”
Lees said that brokers will continue to be relied on as trusted advisers.
“The best brokers will continue to be relied on as trusted advisors for their clients and we want to support our brokers with the insights and tools to help them connect with their clients at the right time with the most relevant and valuable information,” Lees said.
He said that the pre-approval data reflects intent, but does not guarantee that all pre-approved applications will convert into settlements.
“Brokers have a great opportunity to add value to clients that goes beyond simply finding the best rate,” Lees said.
“The market might be warming up, confidence might be growing, but the lending landscape remains complex, and brokers who understand their clients’ financial goals and can help them navigate the landscape will be successful.”
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