Housing Loan Interest Moves Independent of RBA Despite Holding Pattern

Australian inflation, which the Reserve Bank of Australia aims to control with monetary policy, is likely to remain low for some time. As a result, economists estimate that the official cash rate won’t move for up to 19-months. However, lenders appear to have other ideas as the housing market continues to fluctuate.

The Housing Loan Market

So, in terms of housing loans, what’s on the horizon for the average home buyer? Well, according to Canstar, it’s a mixed bag. Some lenders are opting to move rates up, while others have dropped theirs to increase competition and make themselves more attractive to homeowners looking for better deals.

But, here’s the kicker: Variable rates are on the rise, while fixed rates appear to be falling. Canstar estimates that in May some 24 owner-occupier variable rate loans had a rate rise, while 8 housing loan rates fell. Fixed rate loans, on the other hand, for this group, were evenly distributed with some rising and others falling.

Investor loans are a different story altogether. Canstar state that 44 variable investment loan rates shifted in May, with there being a balance between those rising and others falling. Fixed rate loans were the biggest movers though for this group, with 29 housing loans dropping in interest, and only 4 increasing.

So, for the owner-occupier or investor now may be the right time to review their current housing loan, if they haven’t done so already. The market offers excellent opportunities to save for those with higher interest rates. Of course, it’s vital that you crunch the numbers before making a move. Let’s look at recent data.

Given this information, what can those looking to buy or sell a home expect from the market?

The Australian Housing Market

National market trends have reversed with regional housing markets now outperforming capital cities. Also, the unit sector has surpassed homes, and lower priced home prices are on the rise, as higher priced homes slip in value. Although, these trends aren’t consistent across the national market, as always some regions buck these trends entirely.

Nationally, according to CoreLogic RPData, dwelling values dropped by -0.1% over the month, with combined capital city values declined by -0.2%. But, in comparison, regional values rose by 0.2% over the same period.

Sydney and Melbourne, Australia’s most expensive housing markets, make up approximately 60% of the market value. So, as CoreLogic suggest, when these markets decline in value it has a considerable impact on the rest of the nation in terms of combined capital value.

Overall, those looking to invest need to observe new emerging trends when buying. Plus, they also need to look at micro markets, or those within the broader market, to find the most competitive buys.

Are you in search of a competitive home loan? If you said yes, then discuss your options with a mortgage broker. They have access to 100’s of products across a panel of multiple lenders, so could help you find a competitive mortgage.

From eChoice

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These articles provide you with factual information only, and are not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser. The information in these articles is believed to be reliable at the time of distribution, but EFS does not warrant its completeness or accuracy. Neither EFS nor its related bodies, nor their directors, employees or agents accept any responsibility for loss or liability which may arise from accessing or reliance on any of the information contained in these articles. For information about whether a loan may be suitable for you, call EFS on 02 8041 6746.