Home Loan Guide: Who’s Winning in Times of Lower Rates?
Amid this time of high uncertainty brought about by the Covid-19 pandemic, the Australian government has issued a fiscal stimulus package to increase loan borrowings of those who are in financial distress.
In a bid to easen up regulatory requirements for local banks, the RBA has released a fiscal stimulus package amounting to A$90 billion. With this cheap loan that Australian banks can avail of, the government believes it will stimulate spending and ultimately help improve the economy as a whole.
In effect, interest rates were seen to relax at a rate of 0.25 per cent in the coming quarters.
Homeowners vs homebuyers: who’s winning?
As lower rates greet a lot of people looking at entering the property market, it’s worth noting who’s actually winning in this low rates craze. Some believe that it’s the best time to get a home loan, while some say current homeowners are the true winners
Speaking with 9news.com.au, Michael Youren, an IBIS senior analyst, said this measure (stimulus package) can potentially disenfranchise first home buyers from getting the best deals.
The stringent requirements, which is a potential effect of lower rates, can set off potential homebuyers from getting the best deal. This could potentially mean developers or property owners may require a deposit that is higher than the usual.
Lower rates, higher price
As more and more people are getting their loans approved, the property market will be flooded with buyers looking at a property. This means that the housing market might become oversaturated and prices are likely to skyrocket.
He said that has a potential specific impact on first home buyers who, along with many other home buyers, are looking for the best deals. As more and more home buyers participate in the property market, the bidding price will likely deprive a lot of first home buyers.
Best time for homeowners
All things considered, between homeowners and homebuyers, the lower rate phenomenon seems to favor those who own a property at the moment. This is very true if these current homeowners are considering selling their property anytime soon.
Regardless if you’re planning to purchase a property or you currently own one, it’s always to seek professional advice from your trusted broker. You can discuss with them your circumstance and you can better weigh which option best works for you.