The current market mood was caused by negative Government intervention to suppress buyer demand and also the election itself.
Sentiment has changed post-election and now positive Government intervention brings good news again for buyers.
There are 4 key areas that signal this.
- APRA has relaxed its tightening bias, now “encouraging” banks to lower their “assessment rate” (Banks currently assess your loan as if the rate is 7.5%, they will now be able to assess as if the rate is 6.5%) Your borrowing power will now be higher. (APRA answers to the Treasurer. This is clearly a government relaxation). https://www.abc.net.au/news/2019-05-21/australians-could-borrow-more-under-apra-proposal-on-mortgage-l/11133686
- The Reserve Bank has all but signalled that it will cut interest rates next month, and as they say “interest rate cuts are like cockroaches” –when you see one there are surely more to follow (Bill Evans Westpac Chief Economist Friday May 24th). https://www.afr.com/news/economy/westpac-s-bill-evans-adds-third-rba-rate-cut-to-forecast-20190524-p51qrx
- The incoming government has said it will effectively halve the deposit required by a First Home Buyer by removing the need to pay mortgage insurance up front. https://www.liberal.org.au/latest-news/2019/05/12/helping-australians-buy-their-first-home
- The Opposition’s proposed taxes on property have evaporated with the election. This was the main dampener on the market, given they were expected to be in government by now.
What does this mean for you? Firstly – ALL of it is good:
- If you have a loan you can now safely plan for a “worst case” scenario of 6% pa to create a “buffer” within your current loan (use my calculator to work this out).
- Rates are heading down – in such times – stay variable and reap the benefit. Read my article on this here.
- If you are planning towards buying your first home, please talk to me now so that we can prepare together. Click Here to contact me now.
- Investor or owner occupier, if you are intending to buy soon, then don’t dilly dally. Prices are set to firm and rise – buyers will return – the buyers’ market is over.
It is highly likely that current market rules will now continue well into the future. Only the crazy brave would try to take this same set of high taxing policies to another election having just had them soundly rejected.You can plan for your future again. If you haven’t read them before, why not start with my Investment series.
As always if you would like advice specific to your own personal circumstances, please call or email anytime, it’s what I’m here for.
Ask Alan – Your online mortgage broker.