Mortgage brokers in Perth and across Australia are a lot busier recently, due to the news that the Reserve Bank of Australia (RBA) is not expected to make any more cash interest rate cuts in 2015 and may not cut it below its current rate of 2.0% in 2016.
That means that the cash rate will stay at 2.0% for October and probably for the rest of the year. For those who have been waiting for interest rates to go even lower, it may be time to “pull the trigger” on that investment property.
Bill Evans, Chief Economist for Westpac, believes that rate cuts are finished. Craig James, Chief Economist for CommSec, also expects rates to remain constant throughout 2016. Glenn Stevens, Governor of the RBA, did note rising prices in the Sydney housing market, but said they were not enough to consider raising the interest rate yet.
While Perth has seen a flat market over the last year, Melbourne and Sydney have seen prices rise considerably. Mr Stevens believes that other regulatory measures, such as the mandate that banks cap investment property home loans at 10% of their total loans, will help “contain the risks that are arising from the housing market.”
What it Means to You
Perth housing prices have been flat for about a year. As most who have observed property prices know, flat markets don’t last long. When you consider how they are doing in Sydney and Melbourne, it is very possible that the market in Perth will begin to rise.
The Australian Prudential Regulation Authority (APRA) has already made it more difficult for borrowers to obtain investment loans. One of the ways lenders are lowering their ratio of investment loans to total loans is to tighten up their standards and require a deposit of between 20-30% in some areas.
In other words, if you are thinking of buying an investment property, the time to do it is right now. Call us today to learn more: (08) 9453 8888.