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Property News: Things To Expect In The Mortgage Market In 2022

The mortgage market is highly competitive, with more and more lenders joining the fray every year. If a company wants to succeed, they need to at least keep up with the new trends in the mortgage market. Here are some things you can expect in the mortgage market in 2022.

1.  Interest rates are going up

The rates that banks put on mortgages have started to increase, following the RBA’s recommendation. These rates have already started to take effect on borrowers. The interest rate paid by new borrowers broke its previous all-time high in November last year, and rates in that area have risen since then. This will carry on unabated in the coming months as the Reserve Bank of Australia continues to raise the cash rate.

2.  Variable rates will be the default choice

Increasing interest rates have been impacted by fixed-rate repricings. Variable rates have continued to decrease. In the current state of uncertainty regarding the length of the mortgage crisis, it has reverted to one of the comparatively unusual problems: the market’s prominence of fixed rates.

Ordinarily, 15 per cent of new mortgages are drawn out with fixed interest rates. But with the COVID-19 crisis came unusual liquidity support for the banking system from the Reserve Bank of Australia, which lowered fixed rates in particular. At its height, more than half of new loans were made at a fixed rate. Yet with the liquidity support being closed, the mortgage market is beginning to return to more regular patterns, which has provided for the much healthier pricing of fixed-rate products. In response to this, variable rate growth is starting to pick up.

3.  Competition for investors to remain strong

Investor lending rose to greater than 30% in 2021. The latest statistics show that investor lending grew by at least 30% in 2021. Investors not only shunned the housing market during the COVID-19 uptick in housing prices but also chose to remain on the sidelines in certain in-demand areas, with a strong component due to the diminished rental demands in these areas. The pick-up in investors has led to increased competition in the mortgage market, resulting in charged interest rates for owner-occupiers.

4.  High Loan-to-Valuation loans will continue to be scarce

Raising a 20% deposit for a home mortgage has become more difficult due to recent strong home-price growth. Lenders have taken less of these high-risk loans (called High-Loan-to-Value or LVR loans: a 90% LVR loan has a 10% deposit).

From the time of the pandemic to date, the share for low-interest, longest-term loans has lowered by 20%, to now be only 7.5% of all new loans, and an even tinier share for investors.

APRA’s restrictions on high-LVR loans have compelled lenders to take action to avert a reversal in home values. As they had indicated ahead of any official measures, lenders sought to minimize their vulnerability to any change in property values.


The mortgage market is continually evolving. As a result, mortgage lenders must be prepared to adapt to new challenges and opportunities presented shortly. The changes that occur in the mortgage industry will affect the work performed by mortgage lenders, mortgage brokers, mortgage bankers, and the regulators who oversee their business. This is why property news is important to keep up with the latest property updates.

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