There has been a lot of talk around what the rising cash rate and ensuing mortgage interest rates means for people who already have a loan, but what about those who are wanting to enter the property market for the first time? There are several positives for first home buyers: 1. Falling property prices Property prices have dropped around the country - in some areas by up to 25% in 2022. It means homes may be more affordable than they were a year ago. It also means we are moving toward, if not in, a buyers’ market compared to last year’s seller’s market. 2. Increasing rents If you’ve looked for property to rent recently, you would know competition is high, the prices are up and other applicants are offering anything from higher rent to months upfront in a bid to secure a property. Variable rates for home loans are likely to increase and decrease over time, however rents on properties tend to continue to trend upward. Buying your home to live in helps you to get out of the rising-rate environment. 3. Projected flattening of interest rates The RBA has said it is open-minded about how many future rate increases it will make, however economists at the big four banks all predict the peak will happen at some stage in 2023. There are two potential pros for first home buyers. If we peak in 2023, you are unlikely to experience the same turbulence homeowners did last year. Secondly, the stress test applied to loan applications means you should remain within your “comfort” range on repayments if economic factors are brought into control as projected. 4. Higher savings rates The flip side of the rising cash rate is that the interest rate on savings accounts usually also increases. This is good news for people saving a deposit to purchase property. This combined with the decreasing property prices can put buyers in a better position to get onto the ladder. Michele Lay & Matthew Lay Licensee & Director, Ray White Kiama WHAT’S HAPPENING IN OUR MARKET?
RkJQdWJsaXNoZXIy MTI3ODI1