Rates ⬇, 🏠 prices ⬆ & more $'s from our banks
Property prices are heading north! There’s a lot of extra buyer demand, borrowing capacities have increased, rates are likely to go lower and it’s definitely keeping our teamo supremo busy. We’ve had to hire more people as a result – enjoy this month’s Black & White Finance update.
Borrowing capacities - banks lending more
Just this week, Westpac and St George announced the second round of cuts to their already lower benchmark rates – meaning they can lend you even more money for the income that you have in comparison to what they could have before.
Are these two banks preparing themselves for future rate cuts, and factoring these cuts into their calculators already? We will soon see, and we’re watching the other major banks to see if they do the same too. Both these banks and others are offering cash back refinance rebates up to $2000, some are offering $3,500, others are providing cash as an incentive for purchases, velocity, and frequent flyer points and a host of other specials for new to bank customers.
Rate cuts – there’s more coming
Our Reserve Bank of Australia governor Philip Lowe indicated this week that the official cash rate could be cut for the third time this year. The government’s recent tax cuts aren’t really having the desired impact on household spending and our unemployment rate is climbing a little.
We at Black & White Finance agree with what NAB’s economists are saying, that rates will be cut next month, maybe not twice this year though. Some are suggesting one cut now and another before Christmas.
Sydney's recent surge and property on the rise
These lending changes and lower rates are resulting in improvements to our housing market, despite what’s happening to the rest of the economy.
Sydney auction clearance rates in May this year, were hovering at around 50% or so. In September they’ve exceeded an impressive 80%, according to the research from Domain. These are their highest levels since early 2017 – in both Sydney and Melbourne.
Apartments are showing a stronger recovery trend, with unit values up 2.5% over the last 3 months, compared with house values which have improved by 1.6%, according to Corelogic’s National Housing Market Update for September 2019.
QBE Australian Housing Outlook
Each year we share with you the forecasts from QBE, check out their annual forecast here which is highly regarded in the industry and has been around for a long time - QBE Australian Housing Outlook.
Interesting to see what they think Sydney and in particular, Brisbane will perform like over the next 3 years as shown in the image above.
Comprehensive credit reporting (CCR)
In July last year, we wrote about (CCR) Comprehensive Credit Reporting. The second and final round of these changes are now in force meaning, from this September, the banks will have more detailed information about us. So what will the major banks now see about us when we lodge loan applications to them:
- The financial institution where our liability account is held - ANZ, NAB etc.
- The type of account that is held - Personal Loan, Home Loan, Overdraft or Credit Card
- Open and closed dates
- Current account liabilities (for loans, the balance plus redraw amount) or credit limits
- Repayment history including when payments are made on time, or payments that are more than 14 days late
What's next for this year and beyond
The busiest property season of the year is here with Spring and it will be an interesting time to see if property prices continue to head north, even if more properties come onto market. And with the next phase of Comprehensive Credit Reporting here, many observers are wanting to see the impacts – we included. We don’t think these CCR changes will have much of an impact, but it's good to be on top as a borrower.
Lower interest rates which are predicted to edge even lower, a somewhat stable government, the recent tax cuts and our banks lending more money than what they would have before should support ‘the recovery in our property market’.
Things are looking positive!