Interest rate rises: Not ‘if’ but ‘when’
You don’t have to be an economics graduate to understand that one of the contributing factors to the current record-breaking state of the Melbourne property market is the ongoing record low official interest rates that have made home loans so affordable.
With this in mind, we thought the start of the new financial year would be a good opportunity to think about what the Reserve Bank is likely to do with interest rates over the foreseeable future.
If you are a regular reader of these posts, you’ll know that we reminded everyone IN A POST IN EARLY MAY that it is important to keep in mind that at some point our official interest rates must begin to rise again. It’s not a matter of ‘if’, it’s a matter of ‘when’.
We all know that the Reserve Bank has had official interest rates pegged at 0.1 per cent since November last year. What’s more, they have been saying very clearly that they do not expect Australia’s wage growth and inflation to lift enough for it begin raising interest rates until 2024 ‘‘at the earliest’’.
However, in recent weeks we have seen some indications that the move to start raising interest rates could come a little earlier than many have forecast.
The head of Australian Economics at the Commonwealth Bank, Gareth Aird, said a few weeks ago that he expected that the RBA have to reconsider its interest rate strategy. He has been quoted as saying that a cash rate of 0.5 per cent by the end of next year (2022), and reaching 1.25 per cent by the third quarter of 2023, was now much more likely. The Chief Economist at AMP Capital, Shane Oliver, is on the same boat, being quoted recently as saying that he expects a rate hike in 2023.
These early indications are certainly something worth considering for homeowners in the bayside suburbs, particularly if you have been considering making a move or even refinancing your existing mortgage. The simple fact is that the sooner you secure your new home loan, the more likely you are to be able to get it at favourable rates.
Don’t forget, if you need any assistance in making your plans for the future, whether that involves selling and buying or simply getting an updated appraisal to ensure you are working with up-to-date figures, you can call our team at Barry Plant Frankston on 9781 3100.
Best wishes,
Barry Plant Real Estate
Frankston & Cranbourne