More rate cuts, property prices, and offers
In today's update, we look at rate cuts and the lenders who passed these cuts on, property prices, APRA's changes and many awesome offers including our B&WFREEBIE with the winner being announced this Sunday - enjoy!
More % cuts coming
One more interest rate cut by November 2019, and another next year, is what leading economists are predicting if all economic patterns continue. Some leading economists believe this next cut will occur much sooner, even next month.
Why are these rate cuts happening?
Mainly because the RBA has over-estimated growth in the Australian economy, forecasting that the labour market, our number of jobs and wages, will continue to potentially deteriorate this year. These cuts are all about combating this slowdown and boosting the economy because we are, “behind the curve”.
Plus, the housing market is still slow despite the most recent uplift in auction clearance rates. According to Domain.com.au, Sydney did see an improvement on the weekend to 69 percent, while in comparison, this time last year it was at 47.6 percent.
Who passed on these cuts and by how much?
Will property continue to fall or now go back up?
There’s no doubt that sentiment among buyers in the property market is changing, as is indicated by these recent clearance rates. Experts are saying that because the federal election is now done and dusted, and there’s no changes to negative gearing, or capital gains discounts, for the time being people know where they stand from a property perspective. Plus, rates are low and looking like they’re going to get even lower to improve affordability - all signs are pointing upwards for property.
What’s this talk about APRA’s serviceability changes?
The other significant contributor to property prices will be the proposed changes by the Australian Prudential Regulation Authority (APRA), who have removed their 7% benchmarks. Meaning lenders should be able to lend you a bit more money than what they could previously. This benchmark was set in 2014 for the banks to add a buffer to your actual interest rate to slow down the skyrocketing lending and property landscape.
Simply put, if you were making repayments on let’s say 3.24%, APRA made the banks add a buffer on top so they were determining your affordability, on a rate of 7.25%, with some like ING at 8%. Now they’re saying the banks can review, and set their own minimum interest rate floor, and utilise a revised interest rate buffer of at least 2.5% over the loan’s interest rate. So, 3.24% + 2.5% = 5.74%, and this is what your future repayment ability will be based on. This is much less than 7-8% so we should be able to borrow more money if they’re using this new reduced rate to see what repayments we can afford in the future.
What 'hot' deals are on offer
If you want to know more about each lenders policy and how it can benefit you, or of some other great terms or rates on offer at the moment, we’d love to hear from you. Some lenders are offering 300,000 Qantas frequent flyer points, plus the chance to win one of 5 prizes of up to $500,000 off your home loan, $3,500 cash back for switching, and rates as low as 2.99%.
B&WFREEBIE – 1 week to go…got be in it to win it.
If it’s not you that would like to know how we can help, but you do want a holiday and have a friend that we could help, refer them to us and go into the chance to win this awesome prize. They will get some cash for the referral too if successful. There’s one week to go, winner announced this Sunday, 14 July 2019.
The B&WFREEBIE - it's an opportunity for us to give back, to say thanks for referring us to your friends and family, watch this 30-second video to find out how you can win!