2020 Mortgage Trends

2020 brings greater mortgage options for buyers

02 January 2020 Rebecca Jarrett-Dalton

Long gone are the days where homeowners would take out a mortgage and then see their only option as staying with that lender with the life of the loan.

After cutting the official cash rate to historic lows in 2019, the RBA has taken the bold step of urging mortgage holders to shop around to ensure they are getting the best deal on their interest rates. You know what, they are.

Customers expect more from their lenders in return for their business. The lenders who can’t offer the most competitive rate will find themselves quickly broken up with as the act of refinancing becomes a more acceptable means to securing the best deal in town.

The savvy savers we now see in the market seize the opportunity they have opened up by securing their new shiny low rate and tend to keep making the same repayments as they were originally. This is getting these guys ahead by allowing them to build a buffer in an offset account or chipping directly away at the principal.

Heavy discounting in the mortgage world

When we are looking at refinancing it isn't hard to see why.  The current discounts being offered, particularly on fixed loan rates is massive! Right now, there are 5 year fixed loan rates on offer for as low as 2.7 per cent.  Customers are all over it and locking themselves in. But, what does this mean for the longer term stability of rates if banks are already offering lows of under 2.8 per cent and the official cash rate is at the lowest it has been in history? 

Smaller lenders are winners in 2020

The major banks are definitely the ones who are feeling the brunt of customers taking the opportunity to jump ship and find themselves a better deal. Small lenders are capitalising on this by staying competitive and flexible. These small players are also quite happy to sit back and watch the big banks come under scrutiny from the media and watch consumers become more and more agitated with the majors. These guys know that whilst their presence might be limited, they will fight for your business and try to stay relevant in today's culture by adapting to models such as sustainable lending.

2020 will be the year of mortgage brokers and less walk-in applications directly to the bank.