The Australian Reserve Bank (RBA) governor, Glenn Stevens, has suggested that low interest rates will be here for some time to come, maybe even years. This is favourable news for home buyers and investors, but it doesn’t mean that you can rest on your laurels.
What’s the Reasoning for Keeping Interest Rates Low?
The reason for low rates, according to Glenn Stevens, is that the Australian mining industry is in a state of decline. Iron ore, one of Australia’s largest exports, has witnessed a price fall and the mining reserves for other minerals has taken less time than anticipated to extract. Australian households also typically have a high level of debt, which when coupled with rising unemployment suggests that ‘NOW’ is not the right time to make a move on interest rate changes.
Furthermore on the housing market front, while there have been rises in property values and demand is increasing, there is still room for improvement in the construction industry. Based on market data, real estate experts are suggesting that home prices will slow during 2015, even though auction clearance rates are relatively high with reserves being exceeded in Sydney, Melbourne, Perth and Adelaide, which have recorded clearance rates of 66 percent and above.
Foreign investment in Australian property is also expected to rise, especially as the Australian dollar’s value continues to fall. The Chinese lead the way in foreign investment in Australia with some $24 billion being spent on property in Australia over the last 7-years. Economists predict that this amount will rise by $8 billion per year up until 2020.
What’s This Mean to Me?
If you are a home loan holder, then now is the time to review your mortgage. Making a saving now and reducing your minimum monthly home loan repayment may mean that you can pay more off your home loan faster while the rates are lower. Plus, if you’re thinking of investing in property, then now may also be the ideal time to look at buying a property. Rates are low, property prices are starting to rise and demand is beginning to escalate. The shrewd investor will consider their options, research the market and seek out bargains that will grow in capital value over the next 8 to 10-years so that they can make a favourable return.
Do you want to know more about how you can save more on your home loan? If so, then contact eChoice and find the right home loan for YOU today.
Written by eChoice