As we head into autumn, the property market is dishing up every buyer’s favourite combo: low rates and cooler prices.
Here’s what’s happening in the market right now.
On the rate front, the Reserve Bank’s official cash rate, which shapes home loan rates, has been held steady for the past 18 months. Even inflation, which the RBA uses to make interest rate decisions, has remained low and steady at about 1.9% since June 2017. And it’s expected to stay low thanks to slow wages growth and intense competiton in the retail sector.
That’s good news for home buyers and anyone with a mortgage. It suggests interest rates could remain in their current holding pattern for some time notwithstanding any major economic events.
In the property market, price growth has softened especially in Sydney and Melbourne. But we’re certainly not seeing a bursting of any so-called “bubble”. Across our state capitals, values dipped by just 1.2% over the quarter.
Despite this, the latest figures from CoreLogic show that home owners are continuing to make money on property. Nine out of ten homes resold in the December 2017 quarter made a profit for their owners. These sorts of results make it easy to see why home ownership is a goal so many Australians work towards.
Interesting things are happening in the home loan market too.
For one, we’re seeing a welcome return of first home buyers. This is particularly noticeable in Victoria and New South Wales, where more generous stamp duty exemptions became available to first home buyers in mid-2017.
In addition, Australians are using a bigger deposit to buy their home. Over the last quarter, just one in five new home loans had a deposit of less than 20%. That’s a record low, and it’s giving home buyers more equity in their place from day one. Taking out a smaller home loan may also make it easier to handle any rate rises that could occur further down the track.
The upshot is that low rates and weaker home prices are creating plenty of opportunities.
One such opportunity is the chance to take more control of your home loan interest rate. There is still a big difference between the interest rate – and loan features – being offered by different lenders, and having the loan that suits your needs can put money back in your pocket and help you enjoy a fresh financial start for the rest of the year
Talk to your Aussie Broker about a free home loan health check. It can tell you in just a few minutes if your loan continues to be the right one for you or if there’s a better deal available.
You may also be interested in Biggest property boom winners and what’s next in the cycle, With stamp duty exemptions, where can first home buyers afford to buy? and Getting a home loan in 2018: A guide from Aussie’s CEO.