Interest rate update
It is clear to pretty much everyone who has been watching the strength of the property market in Melbourne throughout the past year or two that one of the driving forces behind the impressive levels of buyer demand is the record lows in official interest rates.
With this in mind, it’s worth casting an eye ahead to see what the Reserve Bank is likely to do with interest rates over the foreseeable future, as this will undoubtedly have some impact on how the property market performs in coming years.
Firstly, I think it’s important to remember that at some point our official interest rates must begin to rise again. It’s a matter of when, not if.
If you’ve followed the actions of the Reserve Bank, you’ll be aware that they have had official interest rates pegged at 0.1 per cent since November last year. Furthermore, 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.
Earlier this week the head of Australian Economics at the Commonwealth Bank, Gareth Aird, said 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, has also been quoted recently as saying that he expects a rate hike in 2023.
These early indications are certainly something worth considering for homeowners in Melbourne’s north, 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, our team at Barry Plant Thomastown are always happy to help. You can give us a call anytime on 9466 3233.
Best wishes,
Con Constantinou
Barry Plant Thomastown