Black & White Finance update - October 2018
Welcome to the Black and White Finance update for October 2018. We look at the interest rate hikes over in the United States and how that impacts us, the views our banking experts have for our future, the recent property market statistics and what to expect in 2019.
What is happening in the United States
Leading economists are predicting that interest rates in the Unites States (U.S) are to rise one more time this year, and two to three more times next year - intended to keep their countries inflation from spiking. This could have a rippling effect on our banks here in Australia, impacting our cost of funds. If our Australian banks incur further increases in what we pay for funds in the U.S particularly, this increase will be passed onto the Australian borrower in terms of higher interest rates again. So, this news is pushing for a stronger case to seriously consider fixing your home loan to safeguard against the risk of more interest rate rises.
Best fixed rates on the market to consider:
Owner occupied 3-year fixed home loan rates when making principal and interest repayments*:
Investment 3-year fixed home loan rates when making interest-only repayments*:
Westpac’s experts think
Westpac’s leading economists think that the Reserve Bank of Australia (RBA) will hold off on moving the official cash rate until 2020, but this doesn’t stop the banks from increasing their rates because of increases in their cost of funds – what they pay for funds overseas.
It is fair to assume that if there is another round of interest rate hikes from our Australian lenders, then this fall in house prices will almost definitely continue. Westpac definitely think so, with predictions that house prices will continue to modestly fall for the next 12 months at least.
Other forecasts and interesting statistics
Morgan Stanley’s forecast for the property market decline has shifted from a previous prediction of 5-10 percent, to a possible fall of 10-15 percent. This is their lowest prediction ever recorded, the largest decline prediction since the 1980’s.
Weekly clearance rates, as presented by Corelogic, are showing similar downward trends, much worse than previous years and the trend between low clearance rates and prices is clear.
Low clearance rates, means we have downward trending property prices. Corelogic’s home prices for the period September 2017 to September 2018, show values had dropped by 2.7 percent across Australia. Sydney isn’t doing too well, down 6.1 percent, and Melbourne down 3.4 percent. Interestingly, you’re cheering if you bought in Hobart 6 to 12 months ago and for those lucky Black & White Finance customers that did – high fives to you. Seems as though the data we presented on Hobart in our earlier blogs this year and last, was on point.
What to expect
At Black & White Finance, we don’t see a collapse in the market, only a somewhat controlled downturn. With the Royal Commission and the NSW state and by-elections coming up, we see a little more uncertainty hanging around with continued tighter lending conditions. One thing is for sure, for the time being, we don’t have short term guaranteed house price rises. If you are buying in the right areas with a medium to long term view, history shows you will make solid gains.
Australian Mortgage Awards
We've been nominated as finalists across three categories at this year's Australian Mortgage Awards. This achievement really marks the end to a great year for Black & White Finance. Receiving credit for being one of the best in the country for customer service in particular - we could not be prouder. Winners are announced this Friday the 19th of October at The Star in Pyrmont, Sydney.
In the community
On Sunday the 14th of October, the Black & White Finance crew were out in full force supporting the Rose Bay Summer Carnival, hosted by the Sydney East Business Chamber. It was a very well organised day, jammed with loads of fun. Thanks to everyone - our family, friends and the locals that came by our stand to say hello and enjoy our goodies.
Ask us something
We are keen to hear what you think and also keen to receive your questions. If you want to know more about each banks requirements, or of some great terms, or rates on offer at the moment, please send a note to peter@blackandwhitefinance.com.au or simply call 0448890186. Once again, thank you for reading.
* Your full financial situation would need to be reviewed prior to any acceptance of any offer or product. Subject to lenders terms and conditions, fees and charges and eligibility criteria.