Stay ahead of the curve
For the first time in a few years, the economic situation is looking relatively stable for those who are interested in buying a property.
Last month, the RBA decided to leave the cash rate target unchanged at 3.85 per cent, and at 2.1 per cent, inflation rate is the lowest it’s been for a few years; furthermore, there are predictions of another interest rate drop this year, potentially as early as this month.
What does this mean for the property market?
Well, we haven’t got a crystal ball to see into the future, but history suggests that house prices tend to increase in line with low inflation and rate cuts.
Indeed, further suggesting confidence in the market, according to property data specialists Cotality’s latest Home Value Index national dwelling values rose by 0.6% in July, with the rate of growth holding firm relative to the prior two months.
That marks the sixth straight month of gains, and Cotality points out, the positive inflection aligns with the first rate cut in February.
Investors may also be interested to see the rate of growth in house values is outpacing gains across the unit sector. The past three months have seen national house values rise by 1.9%, adding approximately $16,700 to the median value. In comparison, unit values are up a smaller 1.4% or roughly $9,700 on the median value.
If you’re wondering which will make the better investment, take a look at our article on the benefits and drawbacks of buying a house or unit as an investment here.
What should you do?
Whether you’re an investor, a home owner, or first-time buyer, with the economic conditions looking favourable, the savvy buyer is preparing to get in early before the competition heats up, particularly as spring is traditionally the time to sell.
So, we suggest now’s the time to review your finances, and take a realistic look at what you can borrow.
This may lead to a better deal on your home loan, and a reduction in monthly payments, or if you’re thinking of investing, you may be able to release some capital and buy an investment property.
Be it for buying a new home, or buying an investment property, getting pre-approval on a loan now means you’re ready to go should a great opportunity quickly arise.
A good mortgage broker can help you find a loan tailored to your needs, while potentially saving you time and money. Another advantage of using a broker is they have existing relationships with their lenders, so can often help people find a mortgage when they don’t quite tick other financial providers’ boxes.
For example, if the borrower is self-employed, has a poor credit history or is over 65 years old.
What to consider in a mortgage
Whether you use a mortgage broker, or go direct to the finance provider, such as your bank, find a loan that fits your life, and your goals.
As well as looking at fix or variable rates, you should consider:
- Features: Offset accounts, redraw facilities, or extra repayment options may save more long-term than the current percentage rate difference.
- Flexibility: Can they negotiate waivers on application fees or tailor terms?
- Future-proofing: With rates tipped to fall further in 2025, ask how they’d handle refinancing if better deals emerge.
- For peace of mind that you’ve got the best deal for your circumstance, request other loan options with a clear comparison of rates, fees, and benefits.
Understand the risks
Policy for investors do change, and national and global economies can be volatile, and indeed, personal financial situations change; these variables can affect the household income, so ensure you really understand the level of risk you’re prepared to take, you’re not looking at options which will overstretch you, and you’ve planned by having a bit of a buffer.
We always advise speaking to a financial specialist who can explain what the options are for your financial situation. Always read the small print so you can understand the risks involved, and always ask if you’re unsure or don’t understand anything.
Our aim is to give you information to help you make informed choices. With nearly 50 years of experience behind us, we’re pretty good at reading the market, and we’re always here for an informal chat to answer your property questions.
We’ve helped thousands of people realise their financial dreams through property, and we’re always looking at ways for you to get the best from your investment.
Simply give us a ring on 02 4956 9777, send us an email to mail@newcastlepropertymanagement.com.au or drop into our Cardiff office for a chat.
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