There’s no doubt that one of the key drivers of the incredibly bullish 2021 property market was interest rates sitting at record low levels.

As soon as the RBA slashed the official cash rate to 0.1 per cent in 2020, and started to roll out a range of stimulus programs, property markets responded accordingly and took off.

With the RBA raising rates in 2022, it could change the way property investors look at managing their mortgages.

Here are three trends to watch out for in the mortgage market this year.

Fixed-Rate Demand

When interest rates bottomed out towards the end of 2020, there were a host of sub-2 per cent fixed-rate loans on offer from a host of different lenders.

Savvy home buyers sensing the only way was up, locked in fixed-rate loans for up to four years at a very competitive interest rate.

Now that the RBA has increased the cash, we have already started to see fixed-rate loans shoot up across all the major banks and second and third-tier lenders.

Now fixed-rate loans on similar terms are more than double what they had previously been, leaving borrowers in a tricky situation.

Currently, many experts believe there is still room to lock in some or all of your home loan at a fixed rate and still come out ahead. Variable rates are very low, however, if the RBA continues to hike, they tend to do so with consecutive rises for a period of time. This could quickly change the equation.

While fixed rate loans still are appealing at current levels for those in search of security, with all the hikes we’ve seen in the past few months, demand for fixed rate loans will likely taper off if they continue much further.

Locking in Equity Gains

With property markets rising more than 20 percent across the country and with many locations like Sydney and Brisbane seeing gains in excess of 30 per cent in many areas, homeowners and investors are sitting on some very healthy gains.

With many economists and leading banks tipping the market to cool this year and into 2023, this is likely a good time to make the most of those gains through refinancing.

While you might not need the funds now, by refinancing or finding creative ways to tap into your equity, you might be able to draw out more with property values being so high.

It’s normally a good idea to keep an eye on comparable sales data for your properties and if you see strong sales in your area, consider talking to a mortgage broker trying to tap into your equity. Even if you don’t need it now, it’s possible to leave it sitting in an offset account to facilitate a purchase down the track.

High debt-to-income

We’ve already seen APRA come out and increase the serviceability buffer from 2.5-3 per cent and with some property markets starting to cool, it’s likely that lenders will look to manage risk more than when we’ve seen in the past few years.

According to APRA, the percentage of new mortgages taken out at a debt-to-income ratio above 6 times recently hit a record high 24.4 per cent, up from less than 15 per cent in early 2019.

When this number gets a little high, it’s likely that APRA will start to put lenders on notice in a bid to manage any risk to the overall market.

That could mean it gets a little harder to keep expanding your property portfolio if you’re starting to get stretched.

While APRA has stopped short of implementing any measures that would directly impact lenders, this will be a trend to pay attention to as the year plays out.