Borrower confidence sours ahead of RBA call, MFAA survey warns
Borrower confidence is slipping as higher mortgage rates and cost-of-living pressures squeeze household finances, creating a more cautious environment for first-home buyers and property investors.
The latest Market Sentiment Survey from the Mortgage and Finance Association of Australia (MFAA) shows more Australians are worried about their financial outlook and closely scrutinising home loan repayments and household budgets.
The February survey of 443 MFAA brokers shows almost a quarter of borrowers (24.2%) are now viewed as feeling negative about their financial outlook, up 5.3 percentage points since August. More than half (55.3%) are neutral, while the share feeling positive has dropped to just 20.5%.
MFAA CEO Anja Pannek (pictured) said the rate backdrop has quickly become a key driver of this deterioration.
“Our February survey was conducted shortly after the RBA increased the cash rate to 3.85%, and brokers are already seeing how that shift is influencing borrower sentiment,” Pannek said.
With the Reserve Bank meeting on Tuesday and markets expecting further tightening, major banks including Westpac, NAB, CBA, and ANZ now forecast another cash rate rise in March. Some also pencil in a further move in May following recent commentary on stronger‑than‑expected inflation linked to the Middle East conflict.
Rates, inflation, and tight housing supply fuel caution
Interest rates were the leading reason brokers cited for neutral sentiment, having climbed from third place in the August survey. Cost-of-living pressures remain the strongest driver of negative sentiment, while ongoing housing supply constraints are the third most cited factor contributing to borrower caution.
At the same time, stronger equity positions, job security, and healthy savings buffers are helping to sustain positive sentiment for a smaller cohort.
Sentiment is also diverging by state, with Western Australia showing the highest level of negative views amid concerns over housing supply and availability, while Queensland borrowers are the most upbeat, supported by firmer equity and employment conditions.
Discounting, refinancing and budgeting in sharper focus
The survey also highlights how borrowers are responding to the changing environment.
In the past six months, 97% of brokers have helped clients secure a discount on their loan and 97% have assisted with refinancing to a new lender, while 84% have supported clients with budgeting strategies.
With inflation still running above the RBA’s 2–3% target band, and RBA signalling it will not cut rates until it returns to that range, caution is likely to persist.
Against this backdrop, “ongoing global uncertainty, including tensions in the Middle East and the impact on inflation, will likely add to borrower caution. This reinforces the value of mortgage brokers supporting their clients through changing market conditions,” Pannek said.
