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Research released by Mortgage Choice has revealed that those hoping to buy a property this spring will need to get their finances ready as soon as possible.
Findings from a survey conducted by Mortgage Choice of 1,000 Australians showed that 43 per cent of Australians are in the market to buy a home, with 19 per cent of prospective buyers stating their intentions to make the purchase during spring 2024.
Most of the respondents said they planned on buying with a partner (54 per cent) or on their own (38 per cent).
Speaking to Broker Daily, Mortgage Choice Berwick owner David Thurmond said the best advice for clients is to get pre-approvals in place.
“I think a lot of clients are now finding that properties are going for more than they first expected, so they need to know what their ceiling is with the bank,” Thurmond said.
“What we’re recommending is that if clients come in and say they want to purchase for $800,000 or $1 million, we make sure that’s their absolute ceiling, and then we go off to the bank and get them pre-approved for the maximum amount that they’re happy with, so that they’ve got a fair buffer to play with.”
Indeed, the demand for pre-approvals has seen a surge in the lead-up to spring, with data from Loan Market revealing a 23 per cent increase in finance pre-approvals as buyers gain more confidence from a rise in property listings leading up to September.
According to Loan Market, 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.
Respondents from the Mortgage Choice survey revealed what type of property they intended to buy, with 17 per cent saying a house, 9 per cent saying an apartment, and 17 per cent saying they were not sure what they could afford to buy.
Mortgage Choice determined that this has demonstrated the need for expert advice from a mortgage broker.
However, in terms of affordability, Thurmond said that it’ll continue to be difficult as interest rates remain high, despite the benefits from the stage 3 tax cuts introduced by the federal government in July.
“I think the biggest thing to be mindful of is that lending has changed quite a bit over the last few years to a point now where banks really scrutinise living expenses … HECS repayments for a lot of people have increased, and so that’s bringing down borrowing capacity,” Thurmond said.
Thurmond said that while prospective buyers can calculate to get “a rough idea” of how much they can borrow, it doesn’t consider one’s living expenses.
“So, it’s really important to speak to a broker who’s experienced in fleshing out these potential issues to confirm exactly what the bank’s going to lend you,” Thurmond said.
[RELATED: Brokerage reports ‘spike’ in pre-approvals]
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