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Aussie posts record October loan settlements

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Malavika Santhebennur 4 minute read

The major brokerage has reported what it says are record home loan applications and settlements for an October month, and a return in consumer confidence.

Aussie has reported over $1.6 billion in settled home loans in October, with the brokerage forecasting a settlement value of $18 billion for the 2021 financial year.

The growth projection has followed lodgements in the first quarter to 30 September worth over $6 billion, which the brokerage said was a record, while 32,000 loans have been settled for the calendar year to date.

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Aussie CEO James Symond said that while the property market has been volatile for most of 2020, the typically strong spring season has become even busier following the central bank’s decision to drop the official cash rate.

"Competitive interest rates and the RBA’s record-low cash rate to a 0.1 per cent may have been triggers for the increasing rate of home loan applications. We’ve never experienced pent-up demand like this,” Mr Symond said.

“We are seeing confidence of consumers return. I believe the comeback for the Australian property market has certainly begun. From a demand perspective, there is quite a shift in sentiment.

“The lowest interest rates on record and ongoing local government funding schemes are attracting buyers who have been able to save money as their travel and social spending were restrained during COVID. Personal income tax cuts, a falling number of coronavirus cases and the easing of restrictions have also helped to lift confidence in recent weeks.”

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Mr Symond said he believes the current housing market conditions are creating the “perfect storm” for positive growth drivers, which he said would propel the markets into 2021 and 2022.

Speaking to The Adviser about the property market, Mr Symond said the combination of state and federal government subsidies for property buyers and “remarkably” low interest rates would enable the property market to remain strong into 2021.

“Six months ago, I called it out and said the property market would not drop as some of the heads of banks were saying it would,” Mr Symond said.

“And lo and behold, the property market has certainly not dropped as the heads of the banks and so forth said that they would.

“In fact, it has probably strengthened in most areas if anything. Interest rates are amazingly low and they will stay amazingly low for quite some time. That being the case, the average mum and dad looks upon it as cheap if not cheaper in most cases to buy than rent.”

Referring to Aussie’s Buy vs Rent 2020 Report released in early November, which found that borrowers are paying less in their home loan repayments across more than half of all suburbs than they would if they rented in the same suburb, Mr Symond added that housing affordability has never been cheaper than it currently is for first home buyers, established buyers who wish to upgrade, or investors.

“Buyers are rushing to take advantage of these conditions, and home owners are seeing some of the most attractive rates lenders have ever offered, so many of our brokers are working around the clock to help customers with their applications. This is another encouraging sign, showing that Australians’ appetite for property is stronger than ever,” he said.

While acknowledging that challenges remain in the Australian economy and the property market, Mr Symond concluded that “there are many reasons to be optimistic about the Australian property market, particularly in the long term”.

The sale of Aussie

Reports recently emerged that the Commonwealth Bank of Australia (CBA) may be seeking to merge Aussie with online brokerage Lendi (in which it already owns a stake, alongside ANZ and Macquarie), just days after the announcement that Aussie founder and chairman John Symond would be retiring from the brokerage.

When The Adviser asked James Symond about CBA’s demerger of Aussie, Mr Symond said: “CBA has always expressed interest in selling Aussie. I’ve got no doubt that whatever plans they have in place in the future, it will be one that is best for business all around.

“CBA is always looking at various businesses and potential acquisitions and mergers with the Aussie brand. They’ve been doing this for the last two or three years, and I’ve got no doubt that they will continue to look.”

CBA completed its acquisition of Aussie in 2017 but announced plans to demerge from the mortgage brokerage in June 2018.

CBA CEO Matt Comyn told The Adviser earlier this year that CBA is still “exploring options”, and added at the time that it had delayed its decision on Aussie’s future in response to changes in the regulatory environment and the onset of the COVID-19 crisis.

[Related: Calls for HomeBuilder extension as housing approvals rise]

Aussie posts record October loan settlements
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Malavika Santhebennur

Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

 

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