If you are thinking about a home loan for property in the Rockingham area but don’t know if you’re “ready” yet, it may be wise to pay close attention to the opinion of the President of the Real Estate Institute of Western Australia (REIWA). David Airey, REIWA President, believes that the recent RBA rate cut to 2% should have a positive effect on the housing market in Perth.
Mr Airey bases his argument on people who have been “waiting out the market,” trying to “time” it and buy when prices and interest rates are at their lowest. He stated that he sees the rate cuts as “good management” regarding Perth’s economy.
Mr Airey believes property investors have been slow to buy because rental demand isn’t as high as it has been the last few years. However, many lenders have passed on the lower interest rates to their customers, allowing more rental properties to be positively geared, which means having a positive cash flow.
Gavin Hegney, Manager of Hegney Property Group, feels that everyone will benefit from the recent interest rate cuts. First home buyers can use the First Home Owner Grant (FHOG) and stamp duty cuts to save a lot of money, especially if they build a new home. Those who are using their equity to borrow more money and “trade up” will profit from the current interest rates, too.
Mr Hegney also feels that lower interest rates will help landlords make up any money they have lost from having to lower rents.
What This Means to You
We have been mortgage brokers in Rockingham for a long time. In that time, we have seen a lot of property cycles. While there may be some spikes and some troughs, the bottom line is that prices always trend upward over the long term. When the market is a flat spot or a trough, as it has for the first few months of 2015, you can almost guarantee that prices are about to rise soon.
When the experts predict a “healthy market,” they are saying prices are about to begin a pattern of growth. For you, right now, it means two things. First, it means that the time to buy is right now. No more waiting. Every week you procrastinate can cost you a lot of money, especially over a 30 year loan .
Second, it means that if you buy now, you could almost immediately attain capital growth and equity due to rising home values.
What Happens when the Market Improves?
The RBA rate cuts are designed to stimulate the housing market and the construction industry. As soon as the market appears to have stabilised and be on the way up, the RBA will start raising interest rates again. The RBA manages inflation by raising the interest rate when the market grows too quickly. It might not happen by the end of this year, but it could. If it doesn’t happen this year, it will happen sometime next year.
It doesn’t take a genius to see that right now could be your best chance to buy your first home or “trade up.” Your deposit is probably never going to be lower and neither are prices or interest rates unless the market runs into unforeseen difficulty.
Currently, the market is in a “sweet spot” for buyers. Prices are the same as they were in December of 2013. Interest rates are at an all time low. We agree with the experts that the market should “correct” itself soon. This correction will come in the form of higher prices and higher interest rates.
Call Smartline Rockingham Today
We have been been the leading mortgage brokers in Rockingham since 1999. We currently have access to home loans from 28 different lenders and an assortment of more than 300 credit products.
More than 200,000 homeowners have chosen us to broker their home loans. 98% have said they would come back to us again. That is no accident.
For a home loan pre-approval, call us today: (08) 9527 1800.
