Australians are taking an increasingly optimistic attitude towards the property market. A recent NAB survey stated that house prices and rents are expected to grow over the next two years.
Property ownership still remains to be the Great Australian Dream for over 70% of Australians, according to research conducted by the Commonwealth Bank.
Cash rate now at 1% after the recent 2nd rate cut
With rising unemployment and a slowing economy, the RBA this July cut its cash rate to a record low of 1%. This has seen mortgage repayments reduced for most homeowners with home loans. Not all lenders passed on the full rate cut. ANZ customers will receive the full rate cut after only passing on 18 basis points last June. CBA and NAB passed on a 19 basis points rate cut while Westpac passed on a 20 basis points cut.
Hypothetically and combined with last June’s rate cut, an owner-occupier customer making principal and interest repayment on a $500,000 loan on a 30-year loan term can save as much as $137 per month or $1,644 per year.
It’s also a good time for homeowners to have their home loans reviewed by their lender or mortgage broker. Banks are aggressively offering competitive rates and refinance cashback in a bid to win more customers. You should be going back to your lender If your current rate is still at 4%.
Big four bank updates home lending policy
In response to APRA’s recent regulatory amendments, four major banks have revised its interest rate floor. With a lower assessment rate, borrowing power has increased by as much as 15%
- Home buyers and property investors can now borrow more
- Those who can’t refinance in the past because of strict lending restrictions are very likely capable of refinancing now
The government has delivered tax cuts
The Australian Government’s income tax cut package has been passed by the Senate. This tax cut will be available to millions of Australians almost immediately and depending on how much you earn, it will be between $255 and $1,080. The tax cut aims to help low- and middle-income earners keep more of what they earn and have more money in their pockets. This will in turn help boost household consumption and will be good for the economy overall.
What’s my fearless forecast for 2019 to 2020?
Further rate cuts are expected and most analysts are predicting a rate cut this November and another one in March 2020 bringing the cash rate down to .50%
With falling interest rates, rising consumer confidence and certainty in our government after the recent election victory of the Coalition, prices of properties are less likely to fall and expected to stabilise by the end of the year. Moderate growth in prices is expected in 2020. Banks are starting to lend more which means more people will be applying for a home loan and will be buying homes.
This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
MBM Mortgage Pty Ltd trading as Maverick Finance | ABN 28 149 301 084 | Credit Representative Number 403019 is authorised under Credit License Number 389328
(Maria Papa is a senior finance expert specialising in home loans, investment loans, self-employed loans, Alt Doc loans, car loans, personal loans and loan protection. She has offices in Sydney and Melbourne. If you have questions, call Maria on 0430 144 008 or email her at mpapa@maverickfinance.com.au).
