James Symond's Quarterly
Market Outlook

By James Symond|01 July 2020|5 minute read

suburb outlook

The last three months have been nothing short of extraordinary. We’ve faced lockdowns, border closures and a pandemic. Yet amid it all, there has also been some positive news for homeowners and first home buyers.

Interest rates are at record lows

One of the bright spots of the last quarter is Australia’s record low interest rates. We saw not one – but two – cuts to the official cash rate in March, taking the cash rate down to its lowest ever level of 0.25%.

This has filtered through to home loan interest rates, with a number of lenders now offering rates well below 3.0%.

Not surprisingly, that’s prompted plenty of Aussies to refinance their home loan. CoreLogic data shows that over 70% of its property valuation requests relate to loan refinances – an uptick of 41% over the last 12 months.

The downside is that plenty of home owners could be missing out on super low rates. Our own research revealed that four out of five home owners are confused about what refinancing is. Close to half haven’t even thought about refinancing their loan.

Let’s clear the air on this. Refinancing simply means taking out a new home loan to replace your current loan. It could mean pocketing the savings of a lower rate or accessing money-saving features that your present loan may not offer. Refinancing can also be a way to achieve personal goals like streamlining debt, or using home equity to fund a renovation project.

With rates so low, now is a good time to talk to your Aussie Broker to know if you still have the right home loan for right now. You don’t want to miss out on any potential savings.

Property market defies doomsayers

Despite all the drama of the last few months, so far, the property market has held up well, defying predictions by some forecasters that the economic impact of COVID-19 could see property prices fall dramatically.

As it turns out, home values have climbed in most states over the past quarter, helped along by an 18.5% bounce back in sales activity during May.

Change in home values to 31 May 2020

State Last quarter Last 12 months
NSW 1.1% 14.3%
VIC -0.8% 4.3%
QLD 0.8% 4.3%
SA 1.1% 1.8%
WA 0.1% -2.1%
TAS 0.5% 6.2%
NT 2.1% -2.6%
ACT 1.2% 5.1%

Source: CoreLogic Hedonic Home Value Index 1 June 2020

It’s early days yet, but as CoreLogic points out these results highlight the resilience of our property market.

A raft of government incentives

2020 has also offered a fresh set of government incentives to help first home buyers – and current home owners, kick some property goals.

From 1 July a second round of places will be available through the First Home Loan Deposit Scheme (FHLDS). Available to just 10,000 first home owners each financial year, the first round of places – available from 1 January 2020, have all been reserved – and no surprise.

The FHLDS lets eligible first home buyers buy a place of their own with just a 5% deposit and zero lenders mortgage insurance. It could be a massive cost saver, and a great way to get into the market sooner.

Given that the first 10,000 FHLDS places were reserved within just six months, it’s important to act fast. Get in touch with your local Aussie Broker find out whether you’re eligible for the Scheme, and the steps you can take to become home loan ready.

$25,000 HomeBuilder Grant

Great news for owner occupiers and first homebuyers, who can take advantage of the new Federal Government HomeBuilder $25,000 cash grant to renovate or build a home.

Income limits apply ($125,000 for singles, and $200,000 combined for couples) and the renovations need to be worth between $150,000 and $750,000. In addition, the property can’t be worth more than $1.5 million prior to renovations.

Nonetheless, for first home buyers the grant could make an affordable ‘fixer upper’ even more attractive. Current home owners may benefit too, with the potential to transform their place into a dream home without the hassle and expense of moving.

The minimum renovation/build budget of $150,000 makes it worth speaking to your Aussie Broker for strategies on how you can finance your project. Don’t delay though. The HomeBuilder grant is only available on building contracts entered up to 31 December 2020.

As we head into the second half of 2020, taking good care of your health is still a top priority. But having made it through some very challenging months, we can begin to look ahead and take action to make those property plans a reality. With access to a range of lenders, your Aussie Broker is here to help you get started.

Speak to an Aussie Broker 

Keep learning

How does the RBA influence interest rates?

The Reserve Bank of Australia is our central bank. They set the cash rate, which influences home loan rates.

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Refinancing? An Aussie Broker can help

You may be eligible for a lower rate on your home loan. Contact an Aussie broker today.

Read more