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February 2015

What Lower Interest rates Mean To You
By Bernie Tynes


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This week the RBA reduced the cash interest rate (the rate charged on overnight loans) to 2.25%, its lowest level since July 1968 and the first rate cut since August 2013.

This creates a market condition that will make home loans cheaper and encourage mortgage holders to lock in loans at a lower rate. The standard variable mortgage rate is now down to 5.7% and the discounted rate is now 4.85%. This environment drives more buyers into the market and increases the level of competition to acquire properties for investment, superannuation funds and home ownership.

It’s this level of competition and a general shortage of stock that will have the biggest impact on sale prices. Given current rental yields, it is becoming more attractive for tenants to own their own homes and this adds additional fuel to a market driven by competition and price. The only issue here is the amount required for deposits has also increased along with home prices.

Housing affordability has also reduced significantly. As stated by REINSW, “Effectively the lower cash rates should mean a $180 a month reduction for the average family in conjunction with recent fuel reductions.”

For investors the gap between outgoing mortgage repayments and incoming rental income will also be reduced, driving more investor activity.

For those looking to capitalise on these market conditions and gain a FREE, qualified valuation at the current market of your home or investment property, please contact our sales team on (02) 9699 9179 or visit us online at http://www.infinityproperty.com.au

Author: Bernie Tynes