HOME LOAN MARKET UPDATE | NOVEMBER 2019
The Reserve Bank of Australia (RBA) left the cash rate on hold this month . The medium to long term forecast for continued low interest rates is very promising after the RBA governor, Phillip Lowe’s recent comments:
“Given global developments and the evidence of the spare capacity in the Australian economy, it is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target. The Board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time.”
We continue to be having one of our busiest periods in over five years with banks/lenders back open for business (i.e increased serviceability/borrowing capacity) and greater optimism in the local property market. This has seen many of our clients apply for home and investment loan pre-approvals. Due to the low supply levels in the property market most of our clients with loan pre-approvals are taking longer than usual to find the right property.
First home buyers continue to be active with about 30% of our applications lodged in the last three months for first home buyer clients. Interestingly, some first time property buyers are electing to purchase their first property as an investment property and forego the stamp duty exemption available. It will also be interesting to see when the government announces details of the first home owner deposit scheme, which will allow some first home buyers purchase a home with as little as a 5% deposit. We are expecting the specific loan products available for the first deposit scheme to be inferior with potentially higher interest rates and greater application/entry fees. We hope to have an update on this very soon.
As always if you would like to discuss your situation, please give me a call or send me an email.