Mortgage brokerage Loan Market has reported a significant 23 per cent increase in finance pre-approvals as buyers gain confidence from a rise in property listings leading up to spring.
Over the past 30 days, nearly a quarter more buyers have prepared to enter the real estate market compared to the same period last year, securing pre-approvals in anticipation of upcoming auctions and new listings.
Victoria experienced the highest year-on-year surge in pre-approval applications within the Loan Market network, with a 40 per cent increase.
This was followed by Queensland with a 29 per cent rise and NSW/ACT with a 13 per cent increase.
The increase in pre-approvals comes as Australia’s largest real estate network Ray White reported a 9.7 per cent rise in new property listings for the month up to August 18 compared to the previous year.
Loan Market broker Tommy Nguyen said that the growing number of property listings in capital city markets, following a period of undersupply, has encouraged more borrowers to enter the market.
“There are more people looking to get into the market this spring,” Nguyen said.
“We’ve seen the cash rate hold steady at the last seven RBA meetings and that’s provided buyers with more certainty around what they can borrow.”
Nguyen said that upgraders and first-time home buyers are leading the surge in pre-approval inquiries. According to Loan Market data, the average loan sizes over the past 30 days were:
• $757,920 in NSW/ACT, a 9 per cent increase from the previous year.
• $626,043 in Victoria, a 9 per cent increase from last year.
• $588,388 in Queensland, a 4 per cent increase from last year.
• $538,767 in Western Australia, a 19 per cent increase from last year.
• $488,291 in South Australia, a 7 per cent increase from last year.
Nguyen said: “A pre-approval is an important first step for many people to get the attention of sellers and real estate agents.
“As we see more listings and auction volumes increase from this weekend, I’d expect to see pre-approvals rise further, again.”
According to Loan Market, pre-approvals have gained popularity ahead of the typically busy spring selling season due to providing buyers with clarity on what suburbs and properties they can afford.
Along with this, pre-approvals strengthen a borrower’s position and show sellers and agents that they’re financially ready as well as allowing buyers to address any credit issues that might affect an application before signing a contract.
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