Tag Archives: Interest Rates

Reserve Bank cuts interest rates to 1.5 per cent

The Reserve Bank of Australia has slashed the official cash rate today to a new historic low of just 1.5 per cent.

This is the second time the cash rate has been cut this year with the last cut being in May.

So far the Commonwealth Bank has already announced that it will be passing on a portion of the cut (variable rates will be cut by 13 basis points) and no doubt more lenders will follow suit.

The decision to cut rates this month follows weak inflation data, along with low employment figures, a high Australian dollar and global uncertainty.

Property prices have also cooled down of late thanks to tightening of lending criteria by the Australian Prudential Regulation Authority, which has given the Reserve Bank more room to move.

RBA Governor Glenn Stevens said, “The most recent information suggests that dwelling prices have been rising only moderately over the course of this year, with considerable supply of apartments scheduled to come on stream over the next couple of years, particularly in the eastern capital cities.”

“Growth in lending for housing purposes has slowed a little this year.

“All this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished.”

The rate cut will be good news for mortgage holders and those thinking about breaking into the property market, particularly in places like Mudgee where properties are still affordable.

While lower interest rates do make it harder to save for a home deposit, once you get in and start paying down your home loan you can do it much quicker with low rates, which means it’s much easier to own your home sooner.

So if you’re in a position to buy then now is a great time to put your money to good use and start looking at your property options.

Just make sure to shop around to find the best home loan deals, as different lenders will have different home loan packages to choose from.

If you’re looking to buy and take advantage of the lowest interest rates in Australia’s history, then feel free to get in touch with the team at Professionals Mudgee Real Estate.

How low will interest rates go in 2015?

If you’ve been thinking about locking in a fixed-rate home loan then you may want to wait at least a few more months because it’s looking more and more likely that rates will drop by April this year.

The official cash rate has remained at the record-low rate of 2.5 per cent since 2013, but most forecasters agree that interest rates will drop to 2.0 per cent by the end of this year.

One real estate expert, SQM Research managing director Louis Christopher, believes that an interest rate cut will be on the cards if banking regulator, APRA, imposes investor-lending restrictions this year.

“They will do this in an attempt to reduce risky, speculative investor behaviour, particularly from those who should not be taking on large amounts of housing debt due to their limited capacity to pay it back,” Mr Christopher said.

“However, if APRA does move, it could potentially open the way for the Reserve Bank to make rate cuts, possibly more than the standard 25 basis points.”

Mr Christopher predicts an interest rate cut by April 2015 and a second reduction, possibly in June.

Not everyone agrees with Mr Christopher however, with the Commonwealth Bank recently stating that they believe the Reserve Bank will remain on the sidelines for 2015 so as not to hurt business confidence.

We will have to wait and see but even if there isn’t an official interest rate cut this year it is always worth chatting to your lender to see if you can make any savings on your current loan.

Are you hoping for an interest rate cut this year?

For those who are hoping to take advantage of low interest rates and want to buy a home in Mudgee this year, you can check out local properties for sale at professionalsmudgee.com.au.

 

Source: www.rpmonline.com.au

How to pay your home loan off faster

With interest rates at an all time low and forecasted to go even lower in 2015, many homeowners in Mudgee are taking the opportunity to get ahead on their home loan repayments, and rightly so!

The sooner you pay off your home loan the better as it helps reduce the amount of interest you’ll pay overall, and once your home loan has been repaid you’ll have more financial freedom and peace of mind.

Sometimes small little tweaks to your repayments and the way you spend can help shave years off of your mortgage.

Below we’ve provided some ideas that could help you pay your mortgage off sooner, but we recommend seeking the advice of professionals before making any major financial changes.

Make more frequent payments – If possible, try to make your mortgage payments fortnightly instead of monthly. By doing this you can cut down on the amount of interest you end up paying over the life of your loan. Just keep in mind that not all lenders allow fortnightly payments, so check first.

Utilise lump sum payments – Received a lump sum of money from a work bonus, tax return or anywhere else? Great! This can be parked in your mortgage account to help cut years off of your repayments.

Don’t reduce payments when rates drop – It can be tempting to pay less on your repayments when interest rates fall, but if you’ve been affording the current amount then why start paying less? It might only mean that you’re paying an extra $20 or $50 a month, but every little bit towards your loan helps reduce the amount of interest you pay overall.

Use an offset savings account – An offset account helps you pay off your mortgage faster by allowing you to use the money you put into the account to offset the balance of your home loan. If you can keep a decent amount of money in your offset account, you could cut years and possibly thousands of dollars from your home loan.

Review home loan products regularly – Your financial situation changes over time, as does the mortgage products available on the market, so you should be performing regular mortgage health checks. You may find that there is a better home loan deal out there or a product better suited to your needs. Talk to mortgage providers to find out what they have to offer. Just remember that there can be penalty fees for switching home loans, so keep this in mind.

We hope that our advice can help Mudgee’s homeowners pay off their home loans faster. For those who would like to use their increased equity to help fund a new home you can find homes for sale in Mudgee at our website, professionalsmudgee.com.au.

How low can interest rates go? Will we see a New Year rate cut?

For most of 2014 financial experts have been speculating that a rate rise is in store for us in 2015, however over the last couple of weeks those predictions have been changing.

There’s now growing speculation that there will be an interest rate cut early next year, after 16 months of interest rates holding steady at the record low rate of 2.5 per cent.

At the last Reserve Bank meeting the board stated that interest rates are unlikely to change anytime soon, however there are some key indicators that could lead to an interest rate drop such as rising unemployment in the country and a cooling off of residential property growth.

The most recent official GDP numbers also show a weakening in economic growth to about 2.7% from 3.2%.

All of the above could be signs that interest rates need to be lowered to help drive spending and residential investment in Australia.

If interest rates do drop next year, the Deutsche Bank predicts that there will be two quarter-point reductions, which would bring the cash rate down to just 2 per cent.

But as we have seen with interest rate predictions in the past, things can change quickly so we will just have to wait and see what 2015 has in store for us.

What are your interest rate predictions for 2015? Will interest rate decisions affect your property choices?

Interest rate cuts reach a new record low

interest-ratesThere was talk at the end of last year that we may see further interest rate cuts in 2013, but many Mudgee home owners wondered if the rumours were too good to be true… well it turns out, they weren’t!  Yesterday the RBA had their monthly meeting, and slashed a further 0.25 per cent from the already record low cash rate, while hinting at possible further cuts to come.  This brings the cash rate to just 2.75 per cent.

When the rates dropped to 3 per cent it took most of the major banks several days to weigh up their next move, and in the end partial cuts were passed on.  However, yesterday’s decision has already seen the Commonwealth Bank, Westpac, National Australia Bank and Bank of Queensland rush to pass on the full interest rate cute, with the ANZ to make their decision at their regular monthly review this Friday.  We can only hope, for all Mudgee ANZ customers, that they make the same choice as their competitors have.

If you’re a Mudgee real estate owner on a variable mortgage, you have two options.  Use the rate cut as an opportunity to get yourself out of debt by reducing your monthly/fortnightly payment to the minimum required and paying off those bills that have been piling up with the leftover cash, or if you’ve been paying your mortgage off relatively easily each month, why not continue to pay off your mortgage at the old rate and build yourself up a little equity?

One thing we do know for sure is that the rate cut will be a welcome relief for many Mudgee home owners, and will hopefully help a lot of Mudgee families get back on top of their finances.

How do you view the latest interest rate cut?

 

Good News For Mudgee Home Owners And Buyers!

Interest Rates Roll The DiceThis week the RBA met, and again determined that interest rates would remain on hold at 3% for the 4th consecutive month.  At this stage the major banks have left their variable rates unchanged, continuing the relief on Mudgee home owners and no doubt increasing the temptation for buyers.

Rising house and share prices are boosting consumer confidence, and retail sales in January suggested Australians are starting to spend more after a period of restraint.  Despite this boost in confidence, experts are predicting that interest rates are likely to stay on hold for the remainder of 2013, with some room for more cuts if the economy needs further sparking in the future.

If you currently own real estate in Mudgee, this is no doubt music to your ears.  In fact we’re sure many Mudgee real estate owners sleeping a little easier knowing that rates will be remaining low for at least another month.  But of course if there’s one thing we know about the economy it’s to expect the unexpected.

Rather than using low interest rates as an opportunity to buy big and pay small, you may be better served by using the relief time as a saving period.  Our advice is to enjoy the low interest rates, but rather than lashing out on an extravagant home on the edge of your budget, why not play it a little safer and aim for a mortgage that gives you a little bit of breathing space?  And if you already own a Mudgee house, why not pay a little more off your mortgage every month than you need to?  It’ll help you to build up some equity, and will ease the financial stress when rates do rise again in the future.

 

So Interest Rates are on hold… But what does that mean?

Variable Interest RateYet again the Reserve Bank Board has met and decided to leave the official interest rate on hold at 3%.  But what does that really mean for you as a mortgage holder?

Regardless of the RBA’s decision, the finance industry is a competitive market at the moment and banks and non-bank lenders are fiercely competing for your business – meaning now is a great time to be renegotiating your mortgage!

We’re conditioned to believe that the interest rate is the single most important element to consider when we’re borrowing money to purchase our first home. But is that really the case? No-one wants to pay more interest than they have to, but other factors may influence our decision more than we realise.

The monthly meetings of the Reserve Bank to set ‘official’ interest rates are always reported in great detail by the media, which helps fuel our obsession with interest rates. However, what we’ve realised over the past year is that the Reserve Bank rates, while influential, don’t necessarily directly affect the rates actually offered for loans. Repeatedly, we’ve seen the major banks refusing to pass on cuts to the official rate by lowering their own home loan rates, or only passing on a portion of the rate cut. But even if they do change their rate, it’ll have no effect on you if you’re on a fixed rate loan.

So how do you get the best deal possible?

1. Ask, and you shall receive

Don’t be afraid to contact your lender and ask what they are prepared to do to for you.

You may be pleasantly surprised with their response, as it’s far easier for them to retain a customer than to have to prospect for a new one.

The fact is, in many loan agreements a rate reductions will not be automatically passed on.  The borrower (you) must request to make reduced payments.  So if you haven’t asked your bank for them to review your repayments, chances are you’re already paying more than you have to.

2. Shop around

 Many people still just stick to the major banks.  That’s a traditional view, which has changed immensely in the past decade with the rise of non-bank lenders and mortgage brokers.

If you believe you don’t have time to shop around for the best deal, why not get a broker to do it for you?  What’s better than saving money on your interest payments?  You don’t even have to pay a broker to do it, the banks will!

3. Be prepared to act

 The perception amongst the major lenders is that they can virtually do what they like because you won’t move on from them, so you may have to prepare to make the move for a better deal. That way, the next time you ask for their best deal they will be sure to know you are prepared to move on if they aren’t willing to offer you the best deal they possibly can.

If you have any questions about buying, owning or selling real estate in Mudgee, please give our Professionals Mudgee Real Estate team a call, or feel free to just pop in for a chat.

Adam & Chandelle Woods

 

Mudgee Real Estate – Is It The Right Time To Buy?

Lately our Professionals Mudgee Real Estate team has been fielding questions from Mudgee residents about the RBA’s decision at the beginning of December to drop interest rates.  With the current cash rate sitting at just 3% – the same low figure reached at the peak of the global financial crisis in 2009 – it seems many are worried about the sturdiness of our economy.  For those who are worried and hesitant to make any moves within the property market, we’d like to share some advice that we received from Smartline Personal Mortgage Adviser, Paul Raad.

According to Raad, the main difference between the low interest rates of today and those of 2009 are the reasons behind the RBA’s decision to make the cuts.  In 2009, rates were lowered to stimulate the broader economy, whereas the low interest rates we see today are due to the effect of the high Aussie Dollar on our export-oriented industries.  With the USA printing huge numbers of American Dollars, and overseas investors viewing our Aussie dollar as a safe haven for their cash deposits, it remains difficult to bring our dollar value down.  Normally the RBA would be wary of inflation from such a low interest rate figure, but with mortgages costing more now than in 2009, there is far less risk of this being problematic.

Some are even predicting that the RBA will make further cuts between now and August 2013, with the ASX futures market already suggesting that two further 0.25% decreases could be on the cards.  This should bring a smile to all Mudgee real estate owners and buyers alike.

We have spoken to many people teetering on the edge of buying their first home, but who have hesitated, waited or procrastinated because they’re not sure if it’s the right time.  If this sounds like you, we’re here to say that now is most certainly the time to buy!

With many buyers caught up in the fun of school holidays there is usually less competition at this time of the year, and with interest rates now at a 3-year-low, what are you waiting for?

Interest Rate Cuts – Is It Better To Fix Or Stay Variable?

At the RBA meeting yesterday it was announced that interest rates would again be cut (following a 0.25% drop in October), by a further 0.25%.  The cash rate is now sitting at just 3%, the same as at the peak of the global financial crisis in April 2009.  This got our team at Professionals Mudgee Real Estate thinking, what does this mean for the average Mudgee home owner?

Lower interest rates generally mean it’s a great time to buy; borrowing is easier and your mortgage interest will be lower and more manageable.  But beware, this is not the time to go overboard and purchase a property far above your means.  Don’t make the mistake of thinking that a drop in interest rates now means you should start looking up into higher price brackets.  Buying within your means will ensure you don’t get caught out trying to pay off and maintain a huge house you can’t afford if the interest rates rise again in the future.

If you’re already in the property market, you may like to view the rate drop as an opportunity to get ahead and start reducing your debt.  If you’re managing to make your mortgage repayments easily enough now, why not continue paying the higher rate?  It’s easier than calling up your financial institution and asking to pay the new minimum payment; simply ignore the rate cut and you won’t even notice that you’re creating a gaping hole of equity and paying off your mortgage much sooner.

According to mortgage advisor Jason Khoury (from iChoice Concord), most Australians tend to keep their mortgages on variable terms for as long as they can afford to, hoping to reap the benefits of any cuts that are made.  While it is still uncertain as to which banks will pass on yesterday’s cut, and how much of it they will choose to pass on, there are currently some very attractive 3 and 5 year fixed rates on offer if you (or your broker) are willing to hunt around.

The main benefit to fixing interest rates is security.  If you believe it would fall somewhere in the range of ‘tricky’ to ‘impossible’ to pay off your mortgage if rates were to increase by 1 or 2 per cent, you may sleep easier at night knowing you’re locked in at an affordable rate.  At the end of the day, if you come out of your fixed loan period to discover that in fact you would have been better off staying variable, at least you know that you didn’t waste any time or lose sleep worrying about the affordability of your home during that time.

Naturally, if you are easily affording your mortgage repayments every month, you may prefer to stay on a variable home loan for now.  The variable rates are generally lower than fixed, and while your rate is likely to face increases you will also get an immediate benefit from rate cuts as well.

Our team at Professionals Mudgee Real Estate would love to help all home owners and buyers alike.  If you are in the market to purchase your own slice of Mudgee real estate, we’d love to hear from you.

How Low Can Interest Rates Go?

The Reserve Bank of Australia has again lowered the cash interest rate this month, which means pressure is again on banks and lenders to pass on at least a proportion of the rate cut to mortgage holders. But how low can interest rates go?

The futures market is currently predicting that there will be a fairly big drop in the official cash rate this year, potentially going as low as 2.50 percent by Christmas 2012. For homeowners, this could mean that the average basic variable home loan product could be as low as 5.10 per cent by the end of the year.

We saw some major drops on the stock market this week, and with uncertainty over the state of global economic conditions, it’s likely that the Australian economy will be held together by the RBA cutting rates again in coming months, but we will just have to wait and see what happens.

If banks and other lenders do decide to pass on this month’s full interest rate cut (which is unlikely), it would make for another bit of welcome relief for mortgage holders at least. We’ll wait to see what they do, and whether it opens up lending opportunities to more property buyers.