The Reserve Bank of Australia (RBA) kept its cash interest rate level again in February at 2.0%. That is good news for mortgage brokers and homebuyers in Baldivis and other parts of the Rockingham area. We see this as a continuation of what has been good work by the RBA, allowing more first home buyers and young families to gain entry to the market.
According to Glenn Stevens, Governor of the RBA, the record low interest rates are doing what they are designed to do: create and support demand for housing. Governor Stevens also noted that tougher lending standards are mitigating any increased risk that could be caused by increased demand.
Governor Stevens also announced that price growth in Sydney and Melbourne has “moderated” while “remaining mostly subdued” in the remaining capital cities. According to CoreLogic RP Data, dwelling prices rose 0.7% over the last six months, but dropped 0.6% over the last three.
According to Tim Lawless, Head of Research for CoreLogic RP Data, the interest rate has had the effect on housing prices that the RBA intended: “losing steam but without a collapse in values.”
A plethora of experts are now forecasting a further rate cut later in the year. Mr Lawless believes that a further rate cut won’t risk over-stimulating the housing market. He also noted that mortgage rates have risen slightly due to Government regulations requiring higher capital and a 10% cap on investment loan growth.
What Does This Mean to You?
We think a lot of people may see this news and try to “time the market.” Interest rates are low and housing prices are probably as low as they will be. Interest rates fluctuate but housing prices generally trend up, even if they do have minor ups and downs.
While it may be possible to gain a few thousand dollars if you time the market perfectly, that depends upon a rate drop and the housing market not rising fast enough to “spend” the money you would gain.
Talk to One of Smartline Rockingham’s Mortgage Brokers
Contact us today on (08) 9527 1800 to learn more.