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Property sales up 42% | Analysis reveals fixed-variable rate gap | Twelve Grains Capital



Almost 598,000 residential properties were sold in the year to August, which is the highest number of annual sales since 2004, according to CoreLogic. The August result was 42% higher than the year before and 24% higher than the 20-year average.



Six states and territories recorded sales volumes above their 20-year average:

  • QLD = up 28.9% on the 20-year average

  • WA = up 28.6%

  • NSW = up 25.3%

  • ACT = up 24.8%

  • SA = up 23.4%

  • VIC = up 20.5%

  • TAS = down 3.3%

  • NT = down 12.0%

As the statistics show, buyers are competing hard for properties right now. So if you’re in the market, it’s vital you get your finances in order. That way, if you see a property you like, you can beat the competition. See how much you can borrow now



Some interesting new data sheds interesting light on the eternal debate over whether to have a variable or fixed home loan. Reserve Bank of Australia data for August shows owner-occupiers on three-year fixed loans were paying, on average, 1.26 percentage points less than those on the discounted variable rate. However, as the graph shows, these things move in cycles. The gap between fixed and variable rates might start closing, with the Reserve Bank signalling it will start increasing official interest rates once the economy strengthens.



If you're wondering whether to go fixed or variable, here are three things to consider:

  • Does your variable rate have features a fixed loan might not have?

  • Do you want the repayment certainty that comes from a fixed loan?

  • Have you considered a split loan, which is part variable and part fixed?

Want to compare fixed v variable rates? Let's talk



Have you been squirreling away money during the latest round of lockdowns? If so – join the club. Australian households have been saving an average of 9.7% of their income, according to the most recent data. However, the Reserve Bank has forecast that the saving rate will increase to about 15% by the end of September.



Part of the reason people have been saving more is because they’ve been stuck at home, which has meant they’ve had fewer opportunities to spend money in shops. The Housing Industry Association recently reported that house new house sales are performing strongly – partly "due to increased household savings during the pandemic".



With brokers now legally required to act in the best interests of borrowers – something banks aren’t required to do – borrowers have been turning to brokers in increasing numbers. Mortgage brokers settled 59% of all new home loans in the June quarter – a record market share for brokers in the June quarter. That compares to a market share of 57% in the June 2020 quarter. Last year, ASIC, the financial services regulator, introduced the best interests duty, which obliges brokers (but not banks) to act in their clients’ best interest when providing home loan advice. The Mortgage & Finance Association of Australia said the increasing popularity of brokers reflects “the ever increasing trust and confidence consumers have in their broker and the unrivalled best interests duty a mortgage broker provides”. When you visit a lender, you will be told only about that lender’s products. But when you visit a mortgage broker, you will be able to compare home loans from a range of institutions.


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