Mortgage brokers and people looking for home loans in Perth didn’t get the news they expected in March. Despite rampant rumours to the contrary, the Reserve Bank of Australia (RBA) held interest rates steady for March at 2.25%. While they did send strong signals that another rate cut is forthcoming, there are no guarantees.
Even in the face of some economic indicators that weren’t as strong as the RBA would like, they resisted the temptation to lower the interest to a new record low of 2.0%. Many economists and commentators believe that an ongoing property boom in Sydney was the main factor that prevented another cut.
For those waiting for even lower interest rates, Glenn Stevens, Governor of RBA, didn’t close the door on more rate drops. Mr Stevens said that more rate cuts “may be appropriate in the days ahead” with the purpose of fostering sustainable growth.What We Think
The rate cuts of the last two years have created a subculture of prospective home buyers who keep waiting for further cuts. This game of roulette can be dangerous and cost a lot of money. One of the stated goals of rate cuts is to stimulate the housing market. When rate cuts do their job, housing prices rise. Then, if other factors are in line, rates are pushed back up again.
The bottom line: you may never get as good a “deal” on a home as you can right now. If you are waiting for a rate cut, you are betting on the economy to underperform. You are also betting that property prices won’t rise enough to negate the profit you would make with even lower rates.
The property market has stalled for a few months. With share markets, both in Australia and globally, performing well, housing prices should rise again and rate cuts may stop. Even a month’s delay could cost you thousands of dollars.
Call one of our mortgage brokers to enquire about a home loan: (08) 9453 8888.