Buyers urged to watch their mortgage rates
The demand for fixed-rate home loans has risen following the back-to-back rate cuts by the Reserve Bank of Australia in June and July. This market development has resulted in experts urging first-home buyers to consider fixing their mortgage rates to take advantage of the low interest-rate environment fully.
Fixed-rate home loans accounted for around one in five home loans written over June. “Fixed-term loans are a particularly good option for first-home buyers — especially in the early years when budgeting is often the most critical and expenses of a first home are at their highest. The certainty of knowing what to budget each month for your home loan — irrespective of what interest rates do — provides peace of mind and routine.
The current environment is favorable for many would-be buyers, particularly in Western Australia, who are planning to break into the market. According to property experts – we are on the cusp of a new market outlook and are certainly seeing more confidence in the WA property market. There is no doubt interest rates will continue to have a positive impact on WA’s property market. Some commentators are suggesting Perth is at the bottom of the housing price cycle, so it should only be positive from here.
Along with cheaper mortgages, the changes to serviceability rules could steer more people to consider entering the housing market.
Taking advantage of favorable conditions
Fixed-rate home loans have become cheaper in Australia. In fact, some home loan providers have begun offering fixed mortgage rates below 3%. Some of the majors are close to providing sub-3% mortgage rates.
Are there more rate cuts to come?
Some experts are suggesting that fixing your home loan rate could put you at a disadvantage.
Some feel that rates are at an all-time low – and they are – but the question is are they going to get any lower? Some are asking – can they possibly get any lower?
The likelihood of further rate cuts by the Reserve Bank of Australia as it attempts to stimulate the economy could make sub-3% mortgage rates the new normal for home loans. Economists are projecting two more cuts — one before the year ends and another early next year — bringing the official cash rate to 0.5%.
What is the answer? There isn’t just one answer.
Have very frank and open discussions with your mortgage broker/banker. Your circumstances and plans will help to navigate the question of – to fix or not to fix?
There are also different options. Split loans, hedging your bets with some fixed and some variable. There is no cookie-cutter solution – your home loan needs to be exactly that – yours.
Individual circumstances must always be considered. If you would like some help in assessing your situation and determining your best options, contact me on 0418 903 954 or donna-lee@celsiusfinance.com.au
warm regards,