TJ Jeyadevan recently bought a property in Sydney and said he had seen the market heat up following the last few rate cuts. (Source: Supplied\/AAP) <\/p>\n
Aussies are rushing to get pre-approved for home loans<\/a> following the Reserve Bank of Australia\u2019s (RBA) recent cash rate cuts<\/a>, new Commonwealth Bank<\/a> data has revealed. The central bank\u2019s three interest rate cuts have given buyers more confidence to enter the market and added fuel to property prices.<\/p>\n Pre-approvals with Commonwealth Bank jumped 12 per cent this year following the second interest rate cut in May<\/a>, compared to the same period last year. The three rate cuts have boosted borrowing capacity<\/a> by around 7 per cent, sparking renewed activity from first-home buyers<\/a>, upgraders and investors alike.<\/p>\n TJ Jeyadevan purchased a semi-detached property in the Sydney Hills region a few weeks ago at auction<\/a>.<\/p>\n The 34-year-old finance worker told Yahoo Finance he and his partner had been searching for a property<\/a> since April this year after getting pre-approval.<\/p>\n RELATED<\/p>\n Jeyadevan admitted he found the home-buying experience<\/a> \u201cdemoralising\u201d and said it was a stark difference to his experience buying his first home five years ago, an off-the-plan apartment.<\/p>\n \u201cI found buying a house because of auctions, honestly, it was exhausting \u2026 it was just a very different experience,\u201d he said.<\/p>\n \u201cYou talk to real estate agents and they’ll give you a guide and then the reserve price ends up being 25 to 30 per cent over what was quoted to you.\u201d<\/p>\n Do you have a story to share? Contact tamika.seeto@yahooinc.com<\/p>\n Jeyadevan said he put in offers for three properties prior to auction, but they also ended up selling for 20 to 25 per cent more than the price guide.<\/p>\n \u201cI noticed after the first interest rate [cut] it was a bit of a lagging effect, but definitely after the second one, people were starting to really FOMO into markets<\/a>, especially at auctions,\u201d he said.<\/p>\n \u201cThe two rate cuts really started setting the Sydney market on fire a bit.\u201d<\/p>\n On top of interest rate cuts, the government has fast-tracked its expansion of the First Home Buyer Guarantee<\/a> which helps Australians purchase with just a 5 per cent deposit.<\/p>\n Caps on income and property price<\/a> will be dropped from October 1, instead of the initially proposed January 1 rollout.<\/p>\n Mortgage brokers have already raised concerns about the increased pressure<\/a> this will put on an already hot market.<\/p>\n New South Wales led the charge with a 25 per cent increase in pre-approval applications, CBA data found, followed by Queensland at 16 per cent.<\/p>\n Story Continues <\/p>\n Aussies are also applying for bigger loans<\/a>, with average amounts up 13 per cent to $733,000 and 11 per cent to $546,000 for first-home buyers.<\/p>\n CBA executive general manager home buying Marcos Meneguzzi said the rise in conditional pre-approval activity reflected a \u201crenewed sense of optimism\u201d from borrowers.<\/p>\n \u201cWith our latest variable rate reduction<\/a> coming into effect from 22 August, this trend could continue as buyers look to leverage the current downward rate cycle,\u201d he said.<\/p>\n CBA economists said home price growth<\/a> had outpaced their expectations to date in 2025, fuelled by the RBA\u2019s rate-cutting cycle.<\/p>\n Since the first rate cut in February<\/a>, the bank found national home prices had increased by 3.1 per cent.<\/p>\n It now expects home price growth of 6 per cent in 2025 (up from 4 per cent) and 4 per cent in 2026 (down from 5 per cent), based on a further interest rate cut in November.<\/p>\n It noted the home price unswing was still expected to be \u201crelatively modest and taper out in 2026\u201d due to the relatively shallow interest rate cycle, easing population growth and headwinds in the construction sector.<\/p>\n The RBA’s three interest rate cuts<\/a> have boosted borrowing capacity by thousands, increasing amounts by around 7 per cent.<\/p>\n According to CBA, households with a combined annual income of $150,000 may now be able to borrow up to $642,900.<\/p>\n Households with combined incomes of $175,000 may be able to borrow up to $825,600, while those with incomes of $200,000 may be able to borrow up to $1,008,300, and those with incomes of $225,000 may be able to get $1,191,100.<\/p>\n Jeyadevan said he\u2019d found it helpful to get pre-approval at the start of his home-buying journey<\/a> as it gave him a good estimate of what he could afford.<\/p>\n Pre-approval generally expires after 90 days and Jeyadevan noted he increased his pre-approval amount when he had to apply a second time.<\/p>\n \u201cThat was a lot quicker than the first time around because all the documents were there,\u201d he said.<\/p>\n Through the process, he also befriended his broker, Commonwealth Bank senior home lending specialist Deepajk Gyawali, who ended up coming with him to auctions.<\/p>\n Get the latest Yahoo Finance news – follow us on Facebook<\/a>, LinkedIn<\/a> and Instagram<\/a>.<\/p>\n Commonwealth Bank expects the trend could continue as buyers look to take advantage of lower interest rates. (Source: AAP) <\/p>\n