For everybody looking to buy a home, interest rates on mortgages are something you’ll be keeping a keen eye on, however, the current cash rate is creating opportunities for both buyers and sellers, according to First National Real Estate chief executive, Ray Ellis.
If you know a little about economics, you’ll be aware that interest rates are largely defined by the official cash rate set by the Reserve Bank of Australia (RBA) every month.
The cash rate can be summarised as the interest rate set by the RBA on overnight loans between banks. As money passes hands every day, these institutions (including the Reserve Bank itself) borrow and lend to one another to settle transactions every night. This interest rate is applied to these loans and then goes on to influence all monetary activity, including home loans.
‘When the RBA announced that it would keep the cash rate at the record low of 2 per cent, it was great news for buyers. A low cash rate gives people the chance to lock in fixed rate mortgages that will stay low and affordable’ said Mr Ellis.
‘If you’re on a variable home loan, this means that your repayments should remain unchanged and affordable for the immediate future. Conversely, it could be a terrific time to take out a fixed home loan if you’ve yet to make the plunge, as you’ll be paying these low rates even when the cash rate eventually does rise’.
On the other side of the coin, homeowners who are selling will continue to experience a high amount of attention, especially in certain capital cities.
‘According to CoreLogic RP Data, real estate values in Sydney and Melbourne in particular have been enjoying striking growth, although there are signs that this rate of growth is now slowing’ said Mr Ellis.
‘But even in the cities and regions of Australia where prices have been moderating, low interest rates will continue to fuel demand for property as home loans stay accessible. With these buoyant conditions, home sellers are likely to complete the satisfactory sale of your real estate in a reasonable timeframe’.
The lowest rates since the 1950s also open a window of opportunity to make those renovations you’ve been thinking about. Smart renovations will give your property that extra punch in an already sizzling market. Just be sure to take advantage of the low cash rate while you still can.
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Issued by: First National Real Estate.
For further information contact: Stewart Bunn, National Communications Manager, First National Real Estate on 1800 032 332 or 0413 624 317