HOME LOAN MARKET UPDATE | FEBRUARY 2020
Well no surprises earlier this month with the Reserve Bank of Australia (RBA) keeping the cash rate on hold. Interestingly, many economists are now re-forecasting and predicting the likelihood of future cash rate cuts as a response to the effects of the coronavirus on our economy. Although the full economic impacts of the coronavirus are yet to be known, it is known that our tourism industry has suffered and with China being our number one export market, this is will have a negative impact on our economy. This is why the RBA may require further interest rate cuts if the economy requires a stimulus over the short to medium term.
We are recommending our clients variable rate loan products at the moment as one future rate cut will have variable rate loans at lower interest rates than the current fixed rate products. For our clients who are looking at budgeting and insisting on a fixed rate loan then we are recommending not fixing for any longer than 2 years.
The local property market has got off to an excellent start to 2020 with the clearance rate being around 77%, which is over 20% higher than this time last year. Many of these properties are selling well above reserve. This is in response to greater availability of bank funds, record low interest rates and demand (buyers) being greater than supply (sellers) at this early in the year.
In terms of our client activity this month, first home buyers are very active and looking to get into the property market for the first time . Most of our first home buyer clients are simply sick and tired of paying rent and many can now replace their rental expense with a Principal and Interest rate home loan.
As always,I look forward to hearing from you if you have any questions or would like to arrange a meeting.