Fixed rates on the rise, as CommBank tips a June cash rate hike

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Hold onto your hats, things are about to get a little bumpy. Economists from Australia’s biggest bank are predicting the Reserve Bank will raise the official cash rate as early as June – and we’re already seeing fixed interest rates increase significantly.

Commonwealth Bank (CBA) economists have brought forward their forecasted Reserve Bank of Australia (RBA) cash rate hike from August to June, making it the earliest prediction amongst the big four banks.

We’ll go into more detail on why CBA has brought forward their prediction below, but first something a little more concrete: we’ve definitely noticed fixed rates trending up in recent months.

Fixed rate hikes

For example, back in November, for a $700,000 loan at 80% loan-to-value ratio, a two-year fixed rate with one particular lender was 1.84%.

That rate has since gone up to 3.04% – a staggering increase.

While not every lender has increased fixed rates so significantly, we are seeing them go up across the board.

So if you have been umming and ahhing about fixing your rate lately, you’ll want to get in touch with us sooner rather than later.

Because while most lenders have recently reduced their variable rates to compensate a little, with news now that the cash rate is being tipped to increase mid-year, you can expect variable rates to increase with the cash rate.

So why has CBA brought forward their forecast to June?

Ok, so back to CBA’s June cash-rate hike prediction and why they’ve brought it forward from August.

In a nutshell, CBA senior economist Gareth Aird is anticipating inflation to be a lot stronger than the RBA is forecasting.

As a result, Mr Aird believes this will lead to a rise in the cash rate to 0.25% at the June board meeting (currently it’s at a record-low 0.1%).

“We are very comfortable with our expectation that the quarter-one 2022 underlying inflation data will be a lot stronger than the RBA’s forecast,” explains Mr Aird.

And here’s the thing: it’s not the only cash rate hike CBA is predicting the RBA will make over the next 12 months.

Mr Aird is expecting a further three rate increases over 2022 to take the cash rate to 1%, with another move to 1.25% in early 2023.

That’s five cash rate hikes over 12 months!

Get in touch today to explore your options

Believe it or not, there are more than 1 million mortgage holders out there who have never experienced a rate rise (the last RBA cash rate hike was in November 2010).

And if the CBA’s prediction of five rate hikes over the next 12 months proves right, then some households will be in for a bumpy ride as they face hundreds of dollars in extra mortgage repayments each month.

So if you’re keen to act before the RBA increases the official cash rate, get in touch with us today. We’d love to sit down with you and help you work through your options in advance.

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

FOMO factor: more Aussies looking to buy with mates or siblings

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Ever thought about buying a property with a friend or family member?    You’re not the only one.   The rising cost of property and FOMO has led to more than a quarter of Australians considering buying a property with a ‘non-traditional’ partner.

Most of us long for a place to call our own.

But what do you do if the price of your dream home seems to be rising out of reach?

More and more young Australians are shedding the “mine” mentality, and adopting the “ours” approach in order to get a foot on the property ladder.

In fact, according to a 1,000 person nationwide survey by CommBank, a quarter of home buyers have considered buying a property with their mates, siblings or parents because of increasing concerns about housing affordability.

And this co-ownership mentality is being strongly driven by the fear of missing out (FOMO), with 35% of respondents admitting to being bitten by the FOMO bug.

What’s driving the trend?

In a nutshell:  housing affordability, with more than 60% of survey respondents worried about being priced out of the market.

Other driving factors for teaming up with a mate or family member include being able to buy a bigger and better property.

And then there’s additional pressure from family and friends!

More than 4-in-10 prospective buyers admitted to feeling pressure from friends/colleagues who have already bought, or their parents/family who want them to buy.

Co-ownership hurdles and challenges

So, if purchasing a property with family or friends is a viable option, why don’t more people do it?

Well, that’s because there are a number of challenges involved.

The vast majority of respondents said they harboured concerns about putting their relationship with a family/friend under strain/pressure.

Meanwhile, 1-in-10 respondents didn’t even know co-ownership with friends or family was possible.

Another hurdle is that co-buying and co-owning can be a more complicated process.

We can help guide you through it, including referring you to solicitors to ensure  everyone is fully aware of their financial and legal obligations.

Get in touch to explore your co-buying or guarantor options

Co-ownership with friends or family, or having a parent go guarantor for you, isn’t suitable or possible for everyone.

But there are people out there for whom it could be a good fit.

If you think that could be you, and you want to learn more, then please get in touch.

We’d be happy to run you through a number of possible structured options and opportunities.

Just call us.

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Open banking is ramping up, so how are lenders using your data?

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Open banking is here so just how are lenders and fintechs using your shared data?

A new report has shed some interesting insights.

With all that’s gone on over the past two years, one of the nation’s biggest banking overhauls in recent memory has slipped under the radar.

It’s called ‘open banking’, and it aims to allow you to easily and securely share your banking data with your bank’s competitors to make it more convenient for you to switch banks when you think you’ve found a better deal on a financial product.

For example, instead of spending hours and hours gathering documentation (such as bank statements, expenses, earnings and identification documents) to refinance your home loan, you could simply request that your current bank sends the info across for you.

But, like most things, it comes with a trade-off: you’ve got to share your banking data with the prospective lender, fintech or allied professional to make it happen.

So just how do they use your data?

Australian open banking provider Frollo has just published the second edition of its yearly industry report, The State of Open Banking 2021, which surveyed 131 professionals representing banks and lenders, fintechs, technology providers, and brokers across the country.

The report shows open banking data availability has accelerated dramatically.

In the first 10 months of 2021, 70 banks started sharing consumer data and 14 businesses became accredited data recipients – including three of the four big banks.

This is an increase from just five data holders and five data recipients in 2020.

And more financial institutions are getting ready to jump on board.

The industry survey shows 62% of respondents plan to use open banking data within the next 12 months, and 38% within the next 6 months.

So what are they using the open banking data for?

Well, the most popular uses can be grouped into three categories:

– Lending: income and expense verification is highly valued by 59% of survey respondents.

– Money management: multi-bank aggregation and personal finance management were highly valued by 50% of respondents.

– Verification: customer onboarding (49%), identity verification (38%), account verification (34%) and balance checks (30%) were all highly valued.

What’s in it for you ?

Open banking makes it easier to move lenders and that’s where we can help you.

We’ll review your current loans and offer a simplified loan approval process.

We have the high tech, high touch loan solution for you with rates you will rate !

So if you’d like to explore your options, get in touch today.     Just call us

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Is a home loan lending crackdown on the horizon?

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The federal treasurer has given the strongest indication yet that a home loan crackdown is coming, stating that “carefully targeted and timely adjustments” may be necessary to avoid troubled waters.   So what could a potential lending crackdown look like?

Lending standards and fast-rising property prices have been hot topics of late.

Interest rates are at record-low levels, and the typical Australian home has seen its value increase more than 18% over the past year – the fastest annual pace of growth since the late 1980s.

It’s a recipe that’s making financial regulators a touch worried that some homebuyers are starting to stretch themselves too thin and borrow more debt than they can safely afford.

So federal treasurer Josh Frydenberg recently met with the Council of Financial Regulators – which includes APRA, ASIC, the Australian Treasury and the RBA – to discuss the state of the housing market.

“We must be mindful of the balance between credit and income growth to prevent the build-up of future risks in the financial system,” Mr Frydenberg said in a statement.

“Carefully targeted and timely adjustments are sometimes necessary. There are a range of tools available to APRA to deliver this outcome.”

What could this possible crackdown look like?

Here’s an interesting stat for you: almost 22% of Australians have a mortgage debt that’s more than six times higher than their annual income, according to the latest data from APRA.

That’s up from 16% just one year ago.

The fact APRA mentions that particular stat gives us a pretty good clue as to what one possible lending crackdown measure could be.

“Most analysts expect that this time, APRA will target debt-to-income ratios, probably by limiting the proportion of loans that can be made above six times an applicant’s household income,” explains the ABC.

It’s also worth noting that Mr Frydenberg and APRA are not the only ones to publicly indicate that change could be on the horizon – the RBA expressed similar concerns about the increase in housing prices and housing debt just days ago, too.

“Even though the banks have strong balance sheets and lending standards are being maintained, there is a risk that in this environment, households will become increasingly indebted,” RBA assistant governor Michele Bullock wrote.

Want to know how a potential lending crackdown might affect you?

It’s worth reiterating that we still have very limited information available about what financial regulators have in mind for any potential lending crackdowns.

What we can do, however, is help you assess your potential debt-to-income ratio on any property purchase you currently have in mind. And we can also help you determine your borrowing capacity in the current lending landscape.

So if you’d like to find out more, get in touch today.   We’d be happy to run you through it all in more detail according to your personal circumstances.

Just call us.

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Buy Now Pay Later users put on notice by credit agency

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Buy now,  pay later services like Afterpay have taken Australia by storm, and it’s no wonder.   They’re actually there to make life easier for you and to save paying interest or having to get a credit card.    But can using these payment services affect your chances of getting a loan ?   

In a recent email to brokers and lenders, Equifax states that BNPL accounts and transactions will be included in credit reports from 24 July 2021.

“Expect to see two new BNPL account types available for accounts, enquiries and defaults,” the Equifax email reads.

So what does this mean for your credit score?

Don’t stress, time is on your side!

That’s because it’s still early days and Equifax wants to measure how much BNPL data could affect overall credit scores.

“The new BNPL Comprehensive Credit Reporting (CCR) account types will be quarantined from scores in the short term to prevent any unintended and inappropriate impact on scores. As data builds up over time, we will reassess,” Equifax explains in a FAQ here.

But, Equifax adds, BNPL accounts and transactions will be included in CCR scores as soon as they believe it is sensible to do so.

“We are moving cautiously as we have never seen these types of accounts before, so it is not possible to evaluate and reflect the relationship between [BNPL accounts and transactions] and risk accurately,” they add.

“Equifax will monitor the risk of these accounts as the data accumulates over time.”

But that doesn’t mean lenders won’t be paying attention

It’s worth reiterating that lenders will now still be able to see BNPL transactions and accounts in your Equifax credit report.   According to a parliamentary joint committee this week, they’re already paying very close attention.

When Lenders assess your loan application,  they often look at three months’ worth of bank statements to see what costs and expenses you have today, have had in the recent past and are likely to have going forward, to ascertain whether providing you with a loan is responsible lending or not.

If Lenders see multiple buy now, pay later transactions coming out of your account, it can definately raise some red flags.

But that’s not to say all buy now, pay later purchases will concern Lenders.   For example,  if they see you used Afterpay to buy a dress and you paid it off,  they are likely to conclude that it doesn’t represent any risk to your ability to make loan repayments.

Get in touch today

If you’re worried about what a buy now,  pay later account  – or multiple accounts – could mean for an upcoming loan application, get in touch with us.

We’ll be able to run through it with you and give you some pointers on what you can do to get things sorted.    Just talk to us.

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How much extra will your mortgage cost when interest rates rise?

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After 18 straight RBA cash rate cuts it can be easy to dismiss the notion that interest rates might rise again. But if the cash rate returned to mid-2019 levels, how much extra would an average new mortgage holder expect to pay each month? Let’s take a look.

They say what goes up, must come down.

But does what goes down, have to come up? Well, the big banks think so – and sooner than many expect.

While the RBA held the official cash rate at 0.10% this month – and reaffirmed its position that it does not expect to lift the cash rate until 2024 – there is growing speculation the next cash rate hike could come as early as late 2022.

In June, Commonwealth Bank and Westpac predicted a rate hike around late 2022 to early 2023. In fact, they expect the official cash rate to hit 1.25% in the third quarter of 2023 and 2024, respectively.

Meanwhile, NAB this week hiked its 2-,3- and 4-year fixed rates by up to 0.10% for owner-occupiers paying principal and interest.

Banks can increase fixed rates as a way of heading off potential RBA rate hikes. Generally, the shorter the term of the fixed-rate that’s increased (ie. if 2-year fixed rates are increased), the sooner a bank may believe the next rate hike will be.

So if the big banks are onto something here, how much extra money should you be factoring into your monthly mortgage repayments if the official cash rate rises to 1.25% by 2023/24?

How much extra the average mortgage holder could expect to pay

The first thing to note is that the last time the RBA’s cash rate target was at 1.25% was June 2019 – so not that long ago (but boy, was it a different world back then!).

Modelling from Canstar, published on Domain, shows the average variable mortgage rate would lift from 3.21% to 4.36%, based on the current margin between the two rates.

Now, if you took out a $500,000 loan tomorrow, and the cash rate hit 1.25% in 2024, that modelling estimates your monthly repayments would jump $300 to $2464 per month.

ABC News modelling suggests a similar scenario – repayments up $324 per month.

That’s despite reducing your remaining loan balance to $468,770 after three years of repayments, and assuming the banks only add on the cash rate increase – and not any extra.

And then there’s of course the possibility that further RBA cash rate increases could soon follow.

If, for example, the average variable loan rate increased to 7.04% in 2031, where it was just a decade ago in 2011, Canstar estimates that same borrower who took out a $500,000 loan would pay $900 more in monthly repayments than they do now – even after a full decade’s worth of repayments.

We can run you through your options

It’s hard to imagine that interest rates could rise from the comfort of the current record low cash rate.

In fact, you have to go back as far as November 2010 to when the RBA last increased the cash rate (to 4.75%). We’ve had a run of 18 straight cuts since then.

But the big banks aren’t basing their modelling, predictions and fixed-term rate increases on nothing – and it pays to pay attention.

So if you’re worried about what rate increases could mean for your household budget in the coming years, get in touch with us today and we can run you through a number of options.

That might include fixing your interest rate for two, three, four or five years, or just fixing part of your mortgage (but not all of it).

Every household is different – it’s our job to help you find the right mortgage option for you! Just call us …..

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

EOFY alert! Financial year end just days away

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Small business owners wanting to buy a vehicle, asset or important piece of equipment and immediately write off the cost only have a few days to act this financial year.

To be eligible to claim the full deduction this financial year the asset must be installed and ready to use by June 30.

And with June 30 just days away, time is running out for your business to take advantage of the federal government’s temporary full expensing scheme this financial year.

What is temporary full expensing?

Temporary full expensing is basically an expanded version of the popular instant asset write-off scheme.

It allows businesses that are keen to invest in their future to immediately write off the full value of any eligible depreciable asset purchased, subject to the ATO limits.

This your business through better capital management and cash flow as it allows you to reinvest the funds back into your business sooner.

There is a small catch though: the asset must be installed and ready to use by June 30 in order to be eligible for this financial year.

But rest assured that even if you do order the asset, and then miss the June 30 deadline because it doesn’t arrive in time, you can still write it off next financial year because the scheme is set to run until 30 June 2023.

Asset eligibility

To be eligible for temporary full expensing, the depreciating asset you purchase for your business must be:

– new or second-hand (if it’s a second-hand asset, your aggregated turnover must be below $50 million);

– first held by you at or after 7.30pm AEDT on 6 October 2020;

– first used, or installed ready for use, by you for a taxable purpose (such as a business purpose) by 30 June 2023; and

– used principally in Australia.

Obtaining finance that’s right for your business

Being able to immediately write off assets is all well and good, but if you don’t have access to the funds to purchase them, the scheme won’t be of much use to you this financial year.

So if you’d like help obtaining finance to make the most of temporary full expensing ahead of the impending EOFY deadline, get in touch with us today!

We can present you with financing options that are well suited to your business’s needs now, and into the future.   Just call us

 

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Single parents and first home buyers get big budget boost

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Single parents saving for a property and first home buyers are the big winners from this year’s federal budget. Today we’ll break down the three schemes that will help them crack the property market sooner.

In recent months there have been signs that first home buyers are beginning to shy away from the property market, as investors return in big numbers to take advantage of optimistic property market price outlooks.

So this year’s federal budget focussed on giving first home buyers and single parents a big leg up into the property market through three key schemes, which we’ve broken down for you below.

1. Single parents to purchase a home with a 2% deposit

Single parents hunting for a home will only need to save a 2% deposit to crack into the property market if they secure a place in the federal government’s new Family Home Guarantee scheme.

The scheme allows eligible single parents with dependants to borrow with a deposit under 20% without having to fork out for lenders mortgage insurance (LMI), as the government will guarantee up to 18% of the loan.

An initial 10,000 places will be available under the scheme, which will start on 1 July 2021 and run for four years.

Here’s a quick example of how it works.

Mary is a single parent with two young sons, Johnny and James. Mary has found the perfect home for $460,000 but has struggled to save enough for the usual $92,000 deposit (20%) while paying rent.

However, with the Family Home Guarantee, and on the success of her application with a lender, Mary could move into her dream home sooner, with just a $9,200 deposit (2%).

2. Buying or building your first home with a 5% deposit

Those hoping to build their first home with just a 5% deposit could soon do so thanks to an extension of the First Home Loan Deposit Scheme (FHLDS) for new builds.

The federal government has announced another 10,000 spots in the scheme will be available for new builds from July 1.

Those 10,000 spots are in addition to 10,000 places already allocated for existing home purchases under the scheme, which also become available from July 1.

So that’s 20,000 spots in total across new and existing builds!

The FHLDS allows eligible first home buyers to break into the property market sooner, as you only need a 5% deposit to purchase a property without paying for LMI.

This can save you anywhere between $4,000 and $40,000, depending on the property price and the deposit amount you’ve saved.

You can find out more about the FHLDS and eligibility requirements by getting in touch with us, or on the NHFIC website.

3. Saving a deposit by salary sacrificing in your Super account

The First Home Super Saver scheme will allow you to put up to $50,000 in voluntary superannuation contributions towards a first home deposit from 1 July 2022. Previously only $30,000 could be released for the purposes of buying a first home.

The increase will fast-track homeownership for first home buyers and the government says it recognises that deposits required for home purchases have increased over the years due to house price growth.

Here’s a quick example of how the scheme works.

Sue is an occupational therapist who earns $80,000 per year and wants to buy a new home.

Using salary sacrifice, she directs $12,500 of pre-tax income into her superannuation account each year.

After concessional contributions tax, her balance increases by $10,625. After four years, Sue is able to withdraw $45,226 of contributions and the deemed earnings on those contributions.

Withdrawal tax is applied at a concessional rate of 4.5%, which is Sue’s marginal tax rate minus a 30% tax offset. Sue now has $43,191 she can put towards buying her first home.

Sue’s partner, Rob, makes the same income and also salary sacrifices $12,500 annually to his superannuation fund over the same four years.

Combined, Sue and Rob have $86,382 to put towards their first home, which is $20,838 more than if they were to save in a standard savings account.

Prepare to apply

While the two LMI-related schemes will be available from July 1, it’s important to get ready to apply for them now.

In recent years the 10,000 spots in the FHLDS have been snatched up within a few months, and we’ve had more than a few hopeful applicants reach out to us when it’s too late.

So to help avoid disappointment, get in touch with us today.   We can help you get everything in order prior to the schemes kicking off in the new financial year.   Just talk to us.

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Fixed mortgage rates set to rise in coming months: experts say

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House prices could jump 17% in 2021 and mortgage rates are set to rise much sooner than expected, ANZ Bank has tipped.

How much earlier than expected?

Well, the Reserve Bank has repeatedly said the official cash rate isn’t likely to increase for a few years, but ANZ senior economist Felicity Emmett believes fixed-mortgage rates have already reached their lowest point, or close to it.

In recent times, more than 30% of new loans have been at fixed rates, says Ms Emmett, with two to three-year fixed-term interest rates available below 2%.

But that’s unlikely to be the case for much longer, she believes.

“In the second half of the year these sub-2%, three-year fixed rates that we’re seeing advertised at the moment are less likely to be around,” says Ms Emmett.

“Cheaper funding is not available forever and that will feed through into variable mortgage rates too.”

Shane Oliver, Chief Economist at AMP Capital, also believes fixed mortgage rates “have already started to bottom out”.

“It’s likely that the 30-year tailwind for the property market of falling interest rates has now run its course and longer dated fixed rates (4+ years) are starting to rise,” adds Mr Oliver.

Wait, did you say ANZ is tipping property prices to increase 17%?

That’s right. ANZ economists expect house prices to rise by a “sharp” 17% across the capital cities in 2021.

They’re tipping Sydney and Perth to perform best with 19% growth, followed by Hobart (18%), Melbourne and Brisbane (16%), and Adelaide (13%).

ANZ’s forecast is much more bullish than those of Commonwealth Bank and Westpac, which in February predicted price increases of 8% and 10% respectively.

Ms Emmet says low housing stock levels are combining with FOMO (fear of missing out) to help drive up the market.

“Buyers are taking advantage of historically low interest rates, particularly fixed rates, as well as various government support programs,” Ms Emmet said.

Got a bit of FOMO yourself?

After the relative hibernation of last year, there’s certainly a lot going on in the world of property and finance right now.

So, if you’d like to chat to us about financing a new home you’ve got your eye on, or refinancing your existing loan, get in touch today.

We’ll help sort out that FOMO for you.   Just call us  …..

 

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Boom time: Australian home values surging at fastest pace in 17 years

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It’s official: Australia’s housing market is in the midst of a broad-based boom, with the national home value surging 2.1% higher in February; the largest month-on-month change since 2003.

 

The February surge, which was recorded by CoreLogic’s national home value index, was spurred on by a combination of record low mortgage rates, improving economic conditions, government incentives and low advertised supply levels.

What areas experienced growth?

Well, that’s the remarkable part.

Housing values rose in each capital city and rest-of-state region, highlighting the unusual and diverse nature of this housing upswing.

According to CoreLogic’s research director Tim Lawless, a synchronised growth phase like this hasn’t been seen in Australia for more than a decade.

“The last time we saw a sustained period where every capital city and rest-of-state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fueled buyer demand,” says Mr Lawless.

So which areas performed best then?

Sydney and Melbourne were among the strongest performing markets, recording a 2.5% and 2.1% lift in home values over the month respectively, and making up for their weaker performances throughout 2020.

The quarterly trend, however, favours the smaller cities, including Darwin (up 5.5% over the past three months), Hobart (4.8%), Perth (4.2%) and Canberra (3.7%).

And Mr Lawless says whether Sydney and Melbourne can sustain their new found growth is yet to be determined.

“Both cities are still recording values below their earlier peaks, however at this current rate of appreciation it won’t be long before Australia’s two most expensive capital city markets are moving through new record highs,” he adds.

“With household incomes expected to remain subdued and stimulus winding down, it is likely affordability will once again become a challenge in these cities.”

New home lending is up, cash rate remains on hold

There were two other very interesting pieces of news this week definitely worth noting for soon-to-be borrowers and refinancers.

Firstly, latest figures from the Australian Bureau of Statistics show the value of new home lending hit $28.75 billion in January, up a whopping 44% from the same time a year earlier in seasonally-adjusted terms.

That’s a record high, according to the ABS, and is reflective of the record low interest rates currently available.

Meanwhile, the Reserve Bank of Australia (RBA) kept the official cash rate on hold at 0.1% during their March meeting.

Now, the RBA Governor Philip Lowe once again stated he doesn’t believe that the economic conditions required to increase the cash rate will be met until at least 2024.

But, there are more and more economic pundits suggesting he might be forced into a change of heart if the prudential regulator (APRA) doesn’t introduce lending caps to help cool the booming property market.

So with all that in mind,  if you’d like to explore your borrowing or refinancing options in the current lending landscape – before any potential changes come into play – get in touch today.

We’re here to help you with all your home loan and refinancing needs.

 

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