The world economy is facing unprecedented challenges. From trade wars to currency volatility, several factors are causing uncertainty and upheaval. It leads to a rough economy, with businesses and consumers feeling the effects.
A few critical indicators can provide some clues about the overall economic condition. We can see whether the economy is expanding or contracting by tracking these indicators. Doing so is critical to those who are thinking of getting a home loan.
Cash Rate
You must constantly be looking for this, especially if you want to apply for a home loan. According to the latest minutes from the bank's policy meeting, the Reserve Bank of Australia (RBA) looks set to continue its interest rate hikes for the foreseeable future. The RBA has hiked rates twice this year, in February and May, and the minutes from the May meeting showed that the bank is considering further hikes shortly.
The RBA has been gradually hiking rates since 2016 when it cut rates to a record low of 1.5%. Rates are now at 1.75%, and the next move will likely be up. It will probably please savers who have been struggling with low-interest rates for many years. However, it will be bad news for borrowers, who will see their repayments increase.
Borrowing Power
The borrowing power of Australians will decrease in 2023. It is due to several factors, including the ongoing effects of the health crisis. The pandemic is expected to continue to weigh on the economy. Other factors include the expiration of the first home buyer grant and the increase in stamp duty.
The decrease in borrowing power is likely to have a flow-on effect on the housing market, with fewer people able to afford a home. It could lead to a decrease in house prices, which would be good news for first-home buyers but bad news for those looking to sell their homes.
Considering buying a home in the next few years, it is critical to be aware of these trends and factor them into your decision-making. Speak to a mortgage broker to get a better idea of how much you can borrow and what kind of property you can afford.
Property Prices
It is no secret that the Australian property market is cooling off. Sydney and Melbourne, in particular, are expected to see further price falls in the coming months.
Several factors are driving this slowdown:
- Tighter lending standards are making it harder for buyers to get finance.
- There is an oversupply of properties on the market, particularly in the inner-city apartment market.
- Consumer confidence is down as concerns about the economy and job security continue to weigh on people's minds.
So what does this all mean for you? If you are considering buying a property, now is an excellent time to research and start looking for a bargain. And if you are already a homeowner, it is critical to keep a close eye on your home loan and ensure you have a buffer in place in case prices fall further.
Conclusion
Before purchasing real estate, one must be aware of the cash rate, borrowing power and property prices. It will help you make a more informed decision about whether or not now is the right time to buy.
Whether you want to purchase a home, you should consult Wealthy You. We will find the right financing solution for you – whether a home loan or not – so that you can be empowered and not burdened. So, contact us now for your requirements!
