March cash rate held – why are buyers feeling more confident?
Following its latest meeting, the Reserve Bank of Australia (RBA) has announced it will hold the cash rate at 4.35%. This is the third time it has been held since it was last raised in November.
With inflation flattening at 3.4% in January and weaker-than-expected gross domestic product data this month, there have been whispers we could see some cuts to the cash rate sooner than expected. Current projects forecast potential cuts around August or September, but time will tell.
So, with the cash rate looking to hold steady for a while yet, why are we seeing an increase in people buying property?
Buyers feeling more confident
In the Loan Market network, we have seen a 13% increase in the number of buyers wanting to get pre-approved for finance this year compared to the start of 2023. We have also seen 16% more first-home buyers this year. This shows buyers are feeling more confident, which could be buoyed by the expectation that we have reached interest rate peaks for this cycle.
Another reason we could be seeing more first-home buyers entering the market is the strong growth we are continuing to see in house price growth throughout the nation. According to Ray White data, house prices have already increased 2.2% this year. If this continues, we could see prices increase by over 10% over the year.
Ray White Chief Economist Nerida Conisbee said this could signal stronger growth than last year.
“Over the past 12 months, house prices have increased by 9.7%, and units by 7.4%. However, growth has accelerated quickly in the first two months of this year,” she said.
“The big change this year is the interest rate outlook. Monthly inflation came in at 3.4% in the year to January. With the Reserve Bank of Australia aiming for interest rates at between 2-3%, the odds of a rate cut are rising. So much so that as of last week, markets were pricing in three cuts over the next 12 months.”
On top of this, low rental vacancy rates driving up rental prices could be prompting first-home buyers to move into ownership.
Increasing rents could be attracting investors
While the growing rental prices and lower vacancy can be difficult for tenants, it can be good news for investors. According to Loan Market data, the number of investment loans lodged are up by 6% this year compared to early last yea
PropTrack data shows median advertised rents nationally increased by $60 per week over 2023, averaging $580 per week. Reports show pressures on international investors, particularly those in China who are facing increased interest rates in their own country and a less-desirable economic climate, are leading to many selling their Australian properties. This opens an opportunity for other investors to expand their own portfolio.
Get in touch if you are considering purchasing property – either to live in or to expand your investment portfolio.
Licensing statement: Rayne Finance ABN [70 605 100 838] is authorised under LMG Broker Services Pty Ltd Australian Credit Licence 517192. Disclaimer: (1) As with any financial scenario there are risks involved. This information provides an overview or summary only and it should not be considered a comprehensive analysis. You should, before acting in reliance upon this information, seek independent professional lending or taxation advice as appropriate and specific to your objectives, financial circumstances or needs. This publication is provided on the terms and understanding that: (2) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication. (3) LMG Broker Services Pty Ltd, Rayne Finance (Seed Lending Pty Ltd) and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to the maximum extent permitted by the law to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication.
Explore other FAQs and Facts
Federal Budget 24/25 – what does it mean for you?
Discovering the impact of the 2024/2025 Federal Budget is vital in navigating the current economic landscape. With a focus on addressing the cost-of-living crisis and bolstering the construction sector, measures such as infrastructure investment, rent assistance, and tax cuts aim to alleviate financial burdens and stimulate growth.
How a broker guides your way to owning your first home
Dreaming of your first home? A mortgage broker can be your guiding light. From assessing your borrowing capacity to breaking down costs and exploring deposit options, they make the journey smoother. With their expertise, owning your dream home in Australia becomes not just a dream, but a tangible goal.
5 things to keep in mind before refinancing
Considering refinancing your home loan? While securing the lowest interest rate is tempting, it’s vital to assess beyond that. Lenders vary in serviceability criteria, fees, turnaround times, and lending criteria. Additionally, explore promotions and consider restructuring your loan for optimal outcomes. Learn 5 key factors to save time and money.
How to calculate your equity
If you’ve owned your home for some time, you likely have built up equity—a valuable asset. Equity represents the difference between your home’s value and what you owe on your mortgage. Understanding this figure can empower you financially and open up opportunities for leveraging your home’s value.
7 ways to maximise your returns as a property investor
If you’re looking to maximise returns as a property investor, strategic decisions are key. From choosing the right location to savvy renovations, each step impacts your bottom line. And don’t forget about refinancing—regularly reviewing your home loan could unlock significant savings.
When was your last home loan health check?
Is your home loan still serving you as it should? Over time, circumstances shift, potentially rendering your loan less than ideal. A home loan health check, conducted by your finance broker, ensures your loan remains competitive and aligned with your needs. It’s a stress-free process, offering potential savings and improved features, all at no cost to you.
What happens when your fixed rate term ends?
Fixed rate terms, typically lasting one to five years, define your loan’s interest stability. As this period concludes, your loan may shift to a variable rate unless you opt otherwise. Prepare by discussing potential rates and options with your mortgage broker. Consider repricing or refinancing for better terms, mindful of associated costs.
8 Ways to Strengthen Your Loan Application
Looking to bolster your loan application’s chances? Here are 8 practical steps to enhance your creditworthiness and secure that approval. From reviewing your spending to consolidating debts, each strategy is aimed at strengthening your financial profile.
What is Mortgage Refinancing and how does it work?
Refinancing your mortgage can be a strategic move to secure a lower interest rate, switch loan types, or consolidate debts. However, it’s crucial to weigh the potential benefits against costs like exit fees and taxes. Consulting a mortgage broker can help you navigate the process and determine if refinancing is the right choice for your financial situation.
Refinancing: Your Smartest New Year’s Resolution
2024 brings a promising avenue for financial growth through refinancing. Investors can unlock capital for new ventures, while homeowners discover resources for home improvements and equity growth. Considering refinancing before fixed-rate terms end allows stability and avoids unexpected payment hikes. Delve into our blog to explore the diverse benefits and embrace greater financial stability and flexibility in the coming year!