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Why you need to refinance your home loan - Today?

Monday, July 18, 2022 - 12:58
HiFive man and woman

 

Are you winning during a period of interest rate increases?

What can we do during these times?

Maximise benefits of a declining property market

  • Release your equity when property price still high.
  • Invest in a good rental property while the market is soft (Buyer’s market)
  • Invest in high population growth area
  • Invest shares and other short term high interest deposit schemes

 

Pandemic Boom ended

Australia’s pandemic property boom looks like has come to an end.

RBA has increased the official cash rate by another 0.5%. With that, all the banks increased their variable interest rates. There may be another couple of small rate increases in the coming months.

 

Housing markets in major cities including Melbourne declined in May as higher interest rates, rising inventory levels and lower sentiment dampened conditions.

 

As interest rates normalise over the next 12 to 18 months, property prices will move into a period of decline, with less demand for housing. The trajectory of interest rates will be a key factor in future housing market outcomes.

High inflation, low consumer sentiment, stretched housing affordability and a more conservative approach from lenders are likely to contribute to softer growth conditions in the housing sector over the medium term.

  • 2-bedroom houses in Melbourne have fallen the most. 1 Bedroom units in Perth have fallen the most.

In contrast, prices for all-size houses in Brisbane, Adelaide, Canberra, and Hobart remain robust with all reporting price increases over the same period.

 

While rising investor activity could improve demand for more affordable homes, upsizing buyers remained the largest market segment.

  • It is likely that house prices will continue to grow more than apartment prices in Melbourne and other cities in Australia.

Queensland is currently the fastest-growing state in Australia. In 2020-21, the population increased by 0.9%, well above the national average of 0.2%. The volume of growth was just shy of 46,000 people. Queensland's population growth is driven by interstate migration. In recent years, the volume has increased and has accelerated.

 

Source: Prime Global Cities Index Q1 2022,