FOMO hits Australia’s mortgage market

According to Domain, mortgage brokers are being inundated with applications from homebuyers wishing to break into the market:

Mortgage brokers report they have been inundated with inquiries and home loan applications during what would traditionally be a holiday break.

Most interest has come from owner-occupiers including first-home buyers, while some investors are also keen, according to mortgage brokers…

Melbourne-based Foster Ramsay Finance principal mortgage broker Chris Foster-Ramsay said he was “flat out” processing applications since November.

“I’ve postponed my usual two-week break over Christmas and New Year’s,” he said, adding that his appointments are up 200 per cent year-on-year to date…

Melbourne-based 40Forty Finance director and mortgage broker Will Unkles said business was booming.

“In terms of inquiries and the keenness of buyers to be ready, it’s significantly stronger than six months ago,” Mr Unkles said, adding loosening lending policies have helped more applicants qualify for home loans in recent weeks…

“Deals are going through far easier, there are less questions from banks,” he said. “No bank will admit that but I’m finding from experience that lenders are being less critical.”

The rebound in mortgage applications is not surprising given the cuts to APRA’s interest-rate buffer, the deep cut in interest rates, and announced first home buyer subsidies.

It also points to further price rises, given the strong correlation between new finance commitments and dwelling values:

CoreLogic’s latest chart pack also shows that settled sales have rebounded:

Whereas property listings remain depressed:

This also supports the case for price rises as ‘fear of missing out’ (FOMO) takes hold.

Leith van Onselen

Comments

  1. And with a fear of buying new high rise across the board everyone is digging deeper for houses or townhouses or something at least 20 years old.

    All those planes bringing in loads of new feet for the ladder of opportunity does not hurt either.

    It’s not as though the ALP or Greens will say anything while they have coal mines to whinge about.

  2. So the consensus from all analysts that with this demand prices CANNOT fall

    You know something I experienced as an institutional trader was there can be more buyers than sellers and the price can still be falling

    The market is the strongest at the top and weakest at the bottom

    Every time I read article after article of bullish Euphoria it makes me more convinced I’m correct on my prediction of a correction lower this year

    MB and commenters, keep all these articles coming

    Luv it 🙃

    I’m in Thailand today by the pool overlooking the beach 😎

    Hey hey hey buy a home in Melb and Sydney, for a $1M 50km outside outside the city driving an hour each way to work in traffic 30 years is 2050

    Woohooo what a life

    Do we get one more blip up Q1 to Easter then down, don’t think so, think we will see price falls from the go get this year, what’s that mid later March into Easter we will know Q1 results

    • Seems that a lot of the demand around my area 2257 is driven by specufestors as most places get a “sold” then for lease sign replacing it shortly after. I think they are trying to get in early banking on the FHB trap.

      My bet is that if things settle in HK then it will crash as the demand for the top end will die and be reflected in the auction sales / settlement sales values dropping as the FHB’s fall into the trap in the sub 700k category, that will dent confidence and down we go. However if HK goes south then boom to the moon as everyone there moves / launders their money into AU RE.

      • Jumping jack flash

        The house next door to ours was sold recently, they had inspections the next weekend. Sold sign still on the front lawn. The elderly sellers only had just driven away with the last trailer load of their stuff and their caravan.

        I always feel uneasy when looking through a rental while the sold sign is still there… don’t know why.

        • Haha, yeah me too. And no idea why either? Maybe because it was a home before and now it’s a speculative asset?

    • First time in 6 years of renting I got a letter from my real estate agent asking if we wanted to renew our contract for 6 or 12 months at the same price. Every other year they tried to increase by at least $20 p/week.

      This year they don’t know yet that we are moving out. 😁

  3. Jumping jack flash

    So good. Certainly fantastic news. Prices need to soar higher.
    Higher prices support our banks to create more debt and make our country much more robust and wealthy.

    However there are a few worrying restrictions on the amount of new debt that makes the price inflation possible. Our esteemed and highly intelligent leaders must move quickly to remove them all and enable our New Economy to achieve its full debt potential.

    Fortunately Scotty seems to have offered to pick up the cover charge for new entrants to the debt ponzi.
    What a top bloke!
    How good is debt?

  4. The rebound in mortgage applications is not surprising given the cuts to APRA’s interest-rate buffer, the deep cut in interest rates, and announced first home buyer subsidies.

    When APRA and the RBA eased none of the MB staff could see another boom coming. Does this mean you’re finally going to give up on calling for rate cuts and QE? There’s no point being anti neolib when it comes to immigration but being pro neolib when it comes to monetary policy.

    • The APRA cuts have already pushed prices up
      The serviceability buffer is 5.39 (2.89 + 2.5% from 7.25 in July)
      Price growth from lowering interest rates is now done

      So are you all saying QE is going to push prices up? Genuine Q?

      Can I ask what analysis you are all using to forecast price rises ? Genuine Q

      • Yes, I’m saying QE will push prices up. QE, as undertaken by central banks up to this point, causes asset inflation. That’s what it has done in every place that has tried it. That’s what it will do here.

        • HNH has written many times that he questions whether QE would work in a small economy like ours
          I think the jury is out

          I think HNH should provide his view on how effective QE
          I believe the $ will go into equities

        • QE is coming. QE won’t help the man / woman in the street. It will help those with assets only. QE is mass scale welfare for the rich. This is why I went short cash, long hard assets.

  5. https://www.abc.net.au/news/2020-01-13/property-price-bounce-leaves-first-home-buyers-behind/11854662

    woohoo it’s easy to make money sitting by the pool
    I’ve called my real estate agent at cooleys and my mortgage broker Will unkle and Chris Foster Ramsay
    In oz from here in Thailand
    I said just get as much debt as you can approved and buy baby buy
    They said where ?
    Wherever, who cares everywhere is going up this year
    Fuxx it I’m going to stay in Thailand ordering room service and just buy Australian property
    You can’t lose it’s a sure thing bet !!!!

    • Jumping jack flash

      This!

      There are a few problems and limitations that will need solutions in the future, say around the 2040 or 2050 mark, after a few doublings of house prices (every 7 to 10 years like clockwork), and that pesky problem of stagnant incomes because any spare capacity that could and would have ordinarily been used to pay to staff as wage increases, or create additional fulltime positions, is instead used by the lucky few who can extract it first to obtain more debt for themselves, but it is nothing that some RBA magic won’t be able to fix.

      There’s also that other unfortunate problem where the owners of private companies providing the essentials for life can create as much spare capacity as they like to obtain as much debt as they require by simply jacking up the price of these essentials. People will simply need to pay whatever the price is.
      Since the amount of debt that is required is now infinite, then the prices of essentials, aka the cost of living, will reach the moon. And so it does. This is a much more tricky problem to solve because we are after all a free market economy, and therefore the government cannot and will not dictate prices of essentials, not that they would even care enough to. So the price of food and utilities and other essentials will eventually crowd out all discretionary spending, as we see it doing.

    • reusachtigeMEMBER

      Sounds like you’re living the life to me. Good on you for making the right decision finally!

      • Reusa I’m going to pick up a house in 3 years for half what it costs now while I take trips to exotic locations.
        You’ll be running around trying to refinance your int only loans when you are in negative equity
        Living the dream ….

  6. Fortunately Hong Kongers have now decided Australia is more dangerous than home, due to the bush fires. Not to mention the burning housing assets here and the air quality is worse than Hong Kong. Time to sell up.

    • How do you know this? Do you have contacts in hk? (Those are genuine questions) I think those that can go to anywhere else in the west will, but if they’re desperate to leave a sinking ship they’ll come here as a stepping stone if that’s all they can do to get out, and try to moveto greener pastures later

  7. Rorke's DriftMEMBER

    A privare highrise developer out western sydney that I chat to at the coffee shop has switched to lower rise developments targeting first home buyers. Has four sites in the planning process. Grinning ear to ear with greed for the FHB market, thinks he’ll clean up and probably right.

    I didnt realise this FHB segment was that strong or the subsidy cap so broad to encourage the spivs.

      • This. Everything the gubbermint does is not to help the citizen (even if dressed up that way). It’s to put money in the pockets of developers.

    • With Westpac handing every new immigrant a loan guaranteed by the government..with juicy levels of fraud re the 5% deposit thrown in. That is the real plan…