What an interesting 12 months, we saw housing prices rise sharply, a housing market that was being pushed up by investor purchasing and yet another change.
Official rates remain Steady
You would have heard at the start of the month after the RBA sat for the first time this year that they have again decided to leave official interest rates at the record low of 2.0 percent. This means that rates have now been on hold for nine consecutive months (with the last decrease occurring in May 2015).
Data indicates economic deterioration
Rates remain on hold despite recent economic data highlighting a deterioration of local and international activity. Recent US economic growth figures have been disappointing and this will most likely put a hold on increasing US interest rates and keep the Australian dollar at a stubbornly high level.
Sydney and Melbourne housing boom ends
Sydney’s housing market prices fell by record levels over the December quarter, highlighting that the mid 2015 pricing growth concerns are now misplaced. Melbourne also recorded much lower growth rates at the end of the year with the expectation of price growth to be modest to moderate in most capital cities in 2016.
RBA holds future rate cuts up it’s sleeve
The Reserve Bank has decided to not rattle the cage over February until data highlighting this year’s economic performance becomes available in the next few months.
Despite rates remaining on hold, the prospect remains for a rate cut sooner rather than later particularly with the anticipation of a prospective of a tough forthcoming federal budget.
CBA & NAB make competitive moves early
Commonwealth Bank of Australia and National Australia Bank are aggressively promoting new offers to their broker networks to try and build market share in the lucrative home loan market.
CBA has told us it will beat any advertised one to five year fixed rate home or investment loan interest rate from major rivals Westpac, ANZ or St George, assuming clients are eligible for a CBA loan.
Whereas NAB is offering brokers special pricing for new principal and interest variable rate loans where the lender is an owner-occupier with an 80 per cent loan to value ratio (LVR).
The other major lenders are expected to respond with their competitive offers in the very near future, so be sure to keep posted and follow us on social media.
Smaller lenders offer very competitive rates
Borrowers should also consider looking outside the square as smaller lenders are offering solutions which can be more cost effective than the traditional big 4.
It’s also worth noting that fourteen lenders have recently increased loan-to-value ratios or reduced investor rates by up to 30 basis points.
About the Authors
Katherin is the Principal of LJ Hooker Home Loans Northern Beaches, Sydney. Katherin manages a team of highly experienced and qualified loan writers with a goal to secure the best loan for clients particular needs, specialising in both residential & commercial finance.
Alex is the Principal of Achieve Finance, leading mortgage advisor, broker and lending specialist located in Brookvale on Sydney's Northern Beaches. Alex's client success is due to his thorough knowledge, extensive experience and focus on developing strong relationships with clients and complementary property and loan industry experts.