CASH RATE HITS 3.60%

The Reserve Bank of Australia has lifted the cash rate by 0.25% points to 3.60%, the highest level since May 2012. This is the tenth consecutive rate rise by the RBA.

In March’s statement the coded message is that all it will take is just one more rate hike to ensure inflation returns to target. Experts predict that the RBA is likely to raise the cash rate by 25 basis points (0.25%) next month.

This increase alone will add an estimated $77 to monthly repayments of a $500,000 home loan, and $144 to monthly repayments of a $1 million home loan.

View 7 March statement

SOFTEN IN FEBRUARY PROPERTY VALUE DECLINE

The CoreLogic home price index fell by just 0.14% nationally in February, the smallest fall since May 2022. This indicates an ease in the decline of property prices and the stabilisation of real estate values across Australia, due to the lack of properties for sale.

The report saw a 0.3% rise in property across Sydney, the first increase in more than a year.

Australians are warned that with RBA’s March and (possibly) April’s rate rise, home values could still fall further.

Source: CoreLogic’s February Home Value Index

HOME LOAN TRENDS

GREAT TIME FOR INVESTORS

It is a great time for property investors across Australia, as the national increase in the cost of rent is compensating for the rise in interest rates. The main driver is the Australian rental vacancy rate crisis, sitting at just 0.8% nationally, as of February 2023.

Properties are expected to drop or at least remain where they are in Sydney and across Australia over the next couple of months.

Contact our team of expert mortgage brokers if you would like to discuss your finance situation and borrowing options.

WHAT’S YOUR BORROWING CAPACITY?

Lenders assess borrowers on their ability to make monthly loan repayments, adding a 3% buffer rate on top of the existing interest rate loan cost. This is to ensure you can handle any further interest rate rises.
If the interest rate is sitting at 5.5%, lenders will assess you on your financial ability to make repayments at the 8.5% mark.

This may also reduce your borrowing capacity, and disqualify existing borrowers looking to refinance and switch home loan providers.

If your fixed rate loan is coming to an end, contact us to discuss your home loan options with the current trend of surging interest rates.