Digital home lender Tiimely Home predicts rise in fixed rate and refinance loans after RBA holds rates

Leading online digital home lender Tiimely Home expects an increase in fixed rate and refinance home loans following the Reserve Bank of Australia’s (RBA) decision to hold interest rates at 4.35% on Tuesday.

Belinda Jackson, Tiimely Home’s Head of Retail, said there has been a slowdown in the refinance market as Australians remained hopeful the RBA would deliver positive news.

“In June, we’ve observed a shift in consumer behaviour among refinancers as they awaited the Reserve Bank of Australia’s (RBA) June meeting announcement. Many have been holding off refinancing, and with the decision to hold rates, we anticipate the same patterns we’ve seen in recent months, where individuals under financial pressure continue to seek out savings opportunities,” Ms Jackson explained.

Tiimely Home anticipates a rise in refinance inquiries due to speculation that interest rates won’t fall until next year. The company has observed a movement in fixed rate home loan appetite, indicating customer hesitation about when rates will drop.

“Customers are finding it more challenging and don’t want to be hit with any more rate rises so they may look to fix their interest rate for the next 12 months or longer,” Ms Jackson said.

The company also predicts continued growth in the investor market, reporting an 8.62% increase in first-home buyers applying for investor home loans in 2024, up from 5.87% in 2023.

Ms Jackson noted that Australians are becoming more financially savvy, comparing different lenders and shifting to digital providers who offer competitive rates and fast service.

“Digital lenders tend to offer better economics to the customer because there’s less cost to serve. This is evidenced through Tiimely Home’s existence as we’ve been in the market for seven years, and more customers continue to go with digital lenders,” she said.

However, Ms Jackson cautioned that customers should be aware of banks with aggressive retention policies, as some lenders may take longer to pass on rate reductions or choose not to in some cases to close the margin gap.