So, what happens next?
Right now, the consensus seems to be that this week the Reserve Bank will announce our first cut in official interest rates for the year.
As I pointed out in A POST A COUPLE OF WEEKS AGO, all four of the big banks are now forecasting that the official cash rate will be cut by o.25 per cent this month, which will be good news for anyone with a mortgage, as well as anyone looking to get their foot in the door of the property market.
However, whether these predictions prove to be correct, or the RBA holds off a little longer, there is little doubt that our official rates will be moving lower before too long. So, the logical question on people’s minds is ‘what happens next’? Indeed, I’ve had a few people asking questions about this recently. So I did some research to see what the experts are saying.
Some figures released by Canstar, a home loan comparison site, found that a rate cut of 25 basis points would results in a cut of around $77 in average monthly repayments on a $500,000 home loan. Importantly, for a couple earning the average wage, this rate cut would increase their maximum loan by a bit over $23,000. So a welcome trend, but not a huge difference.
The big changes start to kick in if, as some economists have been predicting, this rate cut is the first of several. As I mentioned in the earlier Update mentioned above, the NAB have forecast that interest rates will be a full 1.0 per cent lower by this time next year, which will mean a far more substantial change in people’s property plans.
Keep in mind, though, that Corelogic have said that their modelling indicates that a cut of 1.0 per cent to official interest rates could result in an increase in median property prices across Australia of over 6.0 per cent, including a price hike of over 9.0 per cent in Melbourne. So if you’re planning on buying, you might be wise to make your move sooner rather than later in order to make the most of the market conditions.
As I always say in these posts, the key to making the right decisions on real estate, (whether you are buying, selling, investing, or a combination of these), is getting the right advice at the start so that you have a clear plan to work to. So if you would an obligation-free chat to help with your planning, feel free to give us a call at Barry Plant Thomastown on 9466 3233.
Regards,
Con Constantinou
Barry Plant Thomastown