September 21, 2023
With September being the third consecutive month of unchanged cash rates, some homeowners are considering rechecking their home loans for new possibilities.
And, with three of the Big 4 Lenders agreeing that the June 4.1% rate is the highest we'll see until mid-late 2024, this consideration is understandable.
Inflation rates have also dropped to 4.9%, which is the smallest such number since February 2022.
On the other hand, the RBA now has a new governor, with more big changes ahead for the central bank
So, what's best for you to do?
We take a look at your options.
We've all read about the current, low listings and vacancy rates, high rentals, troubled consumer sentiment and cost-of-living pressures, and of course, the dropping borrowing capacities.
As is often the case with the property market, things ain't easy out there.
Yet amidst a - slight - cash rate pause, what should we expect to experience in the property market?
Here's what we found our favourite real estate experts believe regarding the current condition:
If you're on a variable loan, the recent cash rate pauses means you'll be able to enjoy some relief.
At the same time, with these loans highly sensitive to cash rate movements, it's doubtful you've seen any decreases lately.
But at least a pause gives you more time to reconsider your loan and your overall finances and consider the possibility of refinancing.
"A rate pause provides an ideal opportunity to carefully plan each move of your strategy, making sure you stay ahead of the curve and make the best decisions possible," property investor group, Iron Fish, notes.
And remember, your savings accounts and any term deposits you have will be enjoying the higher interest rates.
This year has been a tricky one for those on a fixed-rate loan, especially loans that began in the COVID boom period of tiny interest rates.
In what is now referred to as "the mortgage cliff", most of these loans ended this year and are now needing to deal with a much higher rate.
At the same time, one article we read highlighted that rates on fixed loans could drop sooner than those of variable ones.
“Last month in July, there were a lot of increases and almost no cuts to fixed rate home loans,” Mozo banking expert Peter Marshall said in early August.
“That was from the expectation that the RBA is going to lift once, or even twice, more.
"So I think once everyone gets the message that the rate rise cycle is over, those fixed rates will start to come down again.”
Fixed-rate loans may also be appealing to home buyers at the moment - especially first-time buyers.
As Iron Fish notes:
"It is important to remember that while it looks like rates are set to remain stable, there is no guarantee that this will be the case over the longer term."
In short, it's still very hard to say what may happen to interest rates in 2023 and the coming year.
So, a short fixed-rate loan may give such buyers some provisional peace particularly while a new governor and other RBA changes smooth themselves out.
Whether you're planning to buy or sell in this unique time, our team is always happy to help with all such dramas and
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