Melanie Hearse - 8 Apr, 2021

Have we reached the end of low mortgage rates?

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Mortgage rates are likely as good as they are going to get, but how long are they likely to last?

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A combination of record-low mortgage rates, improving economic conditions, government incentives and low advertised supply levels has seen Australia’s property market hit new heights across the country.

Home values across Australia have grown at the fastest monthly pace we’ve seen in 32 years – this February showing the largest month-on-month change in CoreLogic’s national home value index since August 2003.

The trend is true across all capital cities and regions, demonstrating the diverse nature of this housing upswing.

CoreLogic’s data showed Sydney and Melbourne were among the strongest performing markets, with a 2.5% and 2.1% increase in home values over the month respectively. The quarterly trend still favours the smaller cities; Darwin housing values rose 5.5% over the past three months, Hobart’s rose 4.8% and Perth’s 4.2%.

According to CoreLogic’s research director, Tim Lawless, a synchronised growth phase like this hasn’t been seen in Australia for more than a decade. “The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fuelled buyer demand.”

CoreLogic Australian head of research Eliza Owen concurs, saying the record results are really being fuelled by very low mortgage rates, strong buyer demand, particularly from owner-occupiers, and relatively low levels of supply.

“For the stock that is coming onto the market, there’s a lot of buyers, properties are taking less time to sell, it’s more of a seller’s market at the moment,” Owen said.

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Can we expect low rates to stick around?

Given they’ve been a key player in heating up the Aussie property market, it begs the question – have we hit the bottom when it comes to home loan rates?

The answer is likely a loud yes, though The Reserve Bank have indicated they are likely to stick around for the near future. With conditions. 

On Tuesday, Reserve Bank governor Philip Lowe said Australia’s economic recovery from coronavirus had been stronger than expected but it did not expect to lift the official cash rate until at least 2024.

However, the central bank warned it would clamp down on risky lending if the booming market overheated.

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“Housing markets have strengthened further, with prices rising in most markets. Housing credit growth to owner-occupiers has picked up, with strong demand from first-home buyers,” Mr Lowe noted.

“Given the environment of rising housing prices and low-interest rates, the bank will be monitoring trends in housing borrowing carefully, and it is important that lending standards are maintained.”

What does this mean for home buyers or those with an existing mortgage? The odds you’ll lock in a low-interest rate only to see even better deals advertised is slim.

However, there is no one size fits all when it comes to identifying the right mortgage, so if you’re keen to see how you can make the most of this historic event, book a chat with a home loan expert for personalised advice.

You might also like: Why didn’t the Australian housing market crash?

Words by: Melanie Hearse


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