Home buyers take advantage of low-rate fixed loans

author-avatar By on June 16, 2020
Home buyers take advantage of low-rate fixed loans

Photo by Tyler Nix on Unsplash

CommBank's spending intentions data released today revealed owner-occupiers flocked to low-rate, fixed mortgages in May.

Overall, there was a stabilisation in household spending intentions in May, after a fairly sharp decline in April, according to the Commonwealth Bank's monthly household spending intentions report.

Home buying intentions were one of the weakest areas of spending intentions in April, however that stabilised in May, driven by an increase in mortgage applications. 

In particular, owner occupiers are continuing to lock-in fixed rate mortgages, with many mortgage products now firmly in the low-2.00% range, as can be seen in the table below.

Judging from the chart (at foot of article), owner-occupiers now make up nearly half of all fixed rate mortgage loan books.

Traditionally, fixed-rate home loans were heavily favoured by investors, but less so by owner-occupiers.  

CBA chief economist Stephen Halmarick pointed to a potential 10% fall in home prices for the remainder of 2020, but said there are signs the falls may not be as bad.

Previously, CBA economists predicted a 'worst case scenario' of home prices falling by up to 32%

Spending in retail and eating out increases as restrictions ease

Many sectors in CommBank's household spending intentions report were either flat or in decline, with retail spending the only sector experiencing upwards trajectory.

This was buoyed by food, general retail and household furnishings, according to Mr Halmarick.

“It is also worth noting that a larger share of retail sales is now likely flowing through credit/debit card spending, rather than by cash," he said.

"Cash withdrawals by CBA personal account holders from ATMs, EFTPOS and branches is down 29% [for the] year in May."

CBA's card spending data also released today revealed a decrease in online sales, with in-store spending picking up, according to CBA's head of Australian economics Gareth Aird.

"Growth in online spend looks to have peaked, while the easing in restrictions has seen in-store card spend lift," he said.

"Growth in CBA in-store household card spend continues to track higher than in-store merchant spend, reflecting the impact that a lack of foreign tourists is having on overall expenditure."

Food goods expenditure has also plateaued, after peaking in March and April, largely due to hoarding, while food services has picked up again due to eating-out restrictions having been eased.


Source: CBA


The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Great Southern Bank, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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Harrison is Savings.com.au's Assistant Editor. Prior to joining Savings in January 2020, he worked for some of Australia's largest comparison sites and media organisations. With a keen interest in the economy, housing policy, and personal finance, Harrison is passionate about breaking down complex financial topics for the everyday consumer.


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