Currently, the RBA interest rate is at a record low of 2.5%. Lenders have passed savings on to borrowers, producing very low-interest rates for home buyers. Though most economists feel that rates will remain stable for most of this year and start to rise at the end, a statement by Reserve Bank Governor Glenn Stevens keeps the door open for even lower interest rates, depending on the economy.
According to Mr Stevens, “the board has an open mind (about the need to) lower interest rates further.”
The post-Global Financial Crisis economy has provided consumers with record low-interest rates. Along with the First Home Owner Grant program, low-interest rates have helped a large number of first home buyers enter the market.
Though he is keeping an open mind, Mr Stevens is of the opinion that lower interest rates can’t force people to spend money if consumer and investor confidence is too low. He is concerned that resource industry spending has peaked and is being contracted somewhat, without other industries stepping in to pick up the slack.
Consequently, Mr Stevens feels that a trend toward a below normal rate of growth for the GDP may continue.
What This Means to You
First and foremost, we don’t foresee interest rates dropping again, even though the door is open. Sometimes, investors and prospective home buyers play a waiting game with interest rates and lose money as property prices rise. Currently, the Perth market has a perfect combination of factors to encourage buying now.
The economy is performing well and showing signs of a full recovery from the woes of the past few years. Housing prices are on the rise but they haven’t risen to a point where they will start to become problematic for the average home buyer—interest rates are at a record low.
When you put this all together, it adds up to a great time to buy the property. Housing prices rise every month, meaning that every month you wait to buy property costs you money. Gambling against yet another interest rate drop might be a losing proposition for many.
To discuss a home loan, call one of our mortgage brokers at Smartline Rockingham: (08) 9527 1800. A new home may be well within your reach.