 Interest rate predictions
With interest rates at levels not seen for decades, more potential buyers and existing home owners are signing up for variable rates on their home loans, hoping for further falls.
Rates have fallen consistently since September last year and home owners are hoping for more cuts this year.
But, some experts believe this is the end of the cycle and rates are already at their lowest possible levels. CommSec chief economist Craig James believes there will only be one more small rate cut, of around 25 basis points.
However, Mortgage Choice's Kristy Sheppard says 92 per cent of the brokers' customers chose variable-rate mortgages in March with "fixed-rate mortgages falling into an abyss".
"Everyone is thinking rates will fall further and they want to take advantage of that," she said.
Monthly repayments have fallen and average savings are now more than $800 a month on a $300,000 mortgage, compared to this time last year when rates were 4.25 percentage points higher.
Many homeowners were quick to lock in a fixed rate last year when rates were rising well above 9 per cent, but have now been left reeling as rates have fallen to around 5 per cent. Now, if these homeowners want to refinance, many of these customers face exit fees of thousands of dollars.
And with banks and lenders reviewing their mortgage lending criteria and tightening the process and approval criteria it may become harder to get a home loan in the first place. Most lender are now requiring a deposit of between 10% - 20% and will not accept the first home owners grant as deposit. Property valuations are also getting stricter as banks try to mitigate risk.
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