Jacqueline Barton

The busy spring selling season has seen many aspiring homeowners out and about looking for the perfect property to snap up.

Property prices continue to rise (up 0.3% nationally in October), but recently we’ve seen price growth slowing and the market cooling.

If you’re planning to be in a new home before the new year, make sure you get your finance pre-approved early. That way, you’ll be able to dive in when you find the right property for your needs.

Interest rate news

At its latest meeting, the Reserve Bank of Australia (RBA) left the cash rate unchanged at 4.35 per cent.

While the latest inflation data was promising, the RBA said underlying inflation remained too high.

Headline inflation was 2.8 per cent over the year to the September quarter, down from 3.8 per cent over the year to the June quarter. It was the first time annual CPI has been under the 3% upper limit of the RBA’s target range since the March quarter of 2021.

While the inflation news was welcomed by homeowners, the RBA said part of the decline reflected temporary cost-of-living relief.

“Abstracting from these effects, underlying inflation (as represented by the trimmed mean) was 3.5 per cent over the year to the September quarter,” the RBA said in a post-meeting statement.

“This was as forecast, but is still some way from the 2.5 per cent midpoint of the inflation target.”

The RBA doesn’t expect inflation to return sustainably to the midpoint of the target until 2026.

The last RBA cash rate decision for 2024 will be announced on 10 December. Economists anticipate a cash rate cut is likely in the first half of 2025.

To find out how your current home loan compares to others, get in touch today.

Home value movements

National dwelling values increased 0.3% in October – the 21st month of growth since February 2023, according to CoreLogic.

Perth topped the leaderboard, with housing prices increasing 1.4% over the month. On the other hand, values dropped in Darwin (-1.0%), Canberra (-0.3%), Melbourne (-0.2%), and for the first time since January 2023, in Sydney (-0.1%).

Meanwhile, there’s been a rise in advertised stock levels, creating weaker conditions in some markets, as buyers have more choice and less urgency to purchase.

“Total listings are now 13.2% above the previous five-year average in Sydney and 13% higher in Melbourne,” CoreLogic research director Tim Lawless said.

“Despite the rise in listings across the mid-sized capitals, Perth, Adelaide, and Brisbane are still seeing advertised stock levels more than -20% below the five-year average for this time of the year.

“These markets remain well and truly in favour of sellers, although the balance is starting to gradually improve.”

* Monthly Home Values figures as of 31 October 2024

* Australian auction results, clearance rates and recent sales for the week ending 3 November 2024

* The clearance rate is preliminary and current as of 3:20 pm, 6 November 2024

With interest rates on hold and prices coming down in several capitals, now could be a good time to start planning a property purchase.

Talk to us about pre-approval and let’s make it happen.

Additional sources

• CoreLogic RP Data Daily Home Value Index: Monthly Values
• CoreLogic Auction Results
• Realestate.com.au Auction Results

Homeowners have been waiting with bated breath to see when the Reserve Bank of Australia (RBA) will cut the cash rate. It’s been on hold at 4.35% since November 2023.

Some hoped a cash rate cut may come after the US Federal Reserve cut interest rates by 0.50 per cent last month, joining other countries like New Zealand, Canada, and the UK in giving homeowners a reprieve.

However, so far the RBA Board has held firm about the need to maintain a restrictive monetary policy for the time being.

Some economists believe it could still happen this year, while most say early 2025 is more likely.

What’s happening with inflation?

Inflation has been trending lower, which is promising.

In August, we saw Australia’s annual inflation rate fall to the lowest level in three years, at 2.7%. That was down from July’s 3.5% annual pace.

However, the RBA is still waiting for a more sustained drop before cutting the cash rate.

“The board needs to be confident that inflation is moving sustainably towards the [2-3%] target before any decisions are made about a reduction in interest rates,” RBA Governor Michele Bullock said.

What the Big Four banks are saying

Australia’s Big Four banks agree that rates have peaked, but not all are on the same page as to when the RBA might make its first cash rate cut.

• Commonwealth Bank: CBA is still optimistic that we will see a 0.25 per cent cash rate cut in December 2024. Their forecast was pushed out from November to December following recent strength in employment growth.
• NAB: NAB brought forward its forecast of when the RBA will cut interest rates to February 2025, rather than May next year. It’s anticipating a 0.25 per cent decrease to 4.1 per cent in February, followed by one cut per quarter until the cash rate is 3.1 per cent in early 2026.
• Westpac: Westpac expects the cash rate will remain unchanged until February, which will mark the first of four 0.25 per cent cuts throughout 2025.
• ANZ: ANZ agrees the RBA is likely to start an easing cycle from February 2025.

What does this mean for homeowners?

If lenders pass on the cash rate cut, mortgage holders on variable interest rates could save on their repayments.

Running through the numbers, a 0.25 per cent cash rate cut would shave $92 off monthly repayments on a $600,000 loan, bringing them down to $3,907 per month.

Those with a $750,000 mortgage would be looking at a saving of roughly $114 per month.

Next steps

With a cash rate cut likely on the horizon within the next four months, now is the time to review your home loan and weigh up if it still serves your needs.

Speak to us and we’ll explain whether refinancing could be a good option for you in the current mortgage environment. We can also provide advice about interest-saving features like an offset account or a redraw facility.

Please contact us for assistance.

When you’re new to buying property, choosing a home loan can be overwhelming. There are dozens of different lenders out there all offering different types of mortgages. So, which is right for you?

A mortgage broker can help you select the right home loan, based on your specific financial situation and goals. Here are some of the main options.

Principal and interest

Mortgages generally have two components. Principal is the amount of money you borrow. Interest is what you pay in order to borrow that money.

Your loan may be principal and interest, meaning you pay both back with each repayment. Otherwise, you may opt for an interest-only loan, but keep in mind that interest rates for interest-only loans tend to be higher than principal and interest loans.

Variable rate home loans

With a variable rate home loan, your interest rate may fluctuate in line with changes to the cash rate made by the Reserve Bank of Australia (RBA) and other factors. Some borrowers like variable home loans because of the flexibility they offer.

If there’s a cash rate cut by the RBA, for example, lenders may pass on the cut to your interest rate. Likewise, if the cash rate goes up, your interest rate will likely go up too.

Fixed rate home loans

If you choose a fixed rate home loan, your interest rate and repayments will be locked in, usually for a term of between one and five years.

This option is attractive to people who want the certainty of knowing exactly how much their repayments will be each week, fortnight or month. If interest rates are likely to rise, fixing your home loan can be beneficial. But if rates come down, you won’t benefit.

Keep in mind you may incur a fee if you decide to switch to a variable rate or refinance your home loan.

Split home loans

A split home loan offers the best of both worlds. It means a portion of your mortgage is variable, and the rest is fixed.

You’ll benefit if rates drop (on the variable portion), but will also be protected if rates increase (on the fixed component).

Other considerations

Basic versus standard

Basic home loans usually have fewer features than standard home loans, so they’re generally cheaper. Often they come with a variable interest rate.

Packaged loan

Packaged loans bundle a home loan with other financial products such as a credit card or transaction account. A discount may be applied to your home loan or fees on some or all of the products are waived for the life of the loan. Usually, there’s an annual fee for a packaged loan.

Offset

An offset is when you have a transaction or savings account linked to your mortgage, and the balance is offset against your loan amount.

Say you have $50,000 in the offset and a loan balance of $500,000. You’d only pay interest on $450,000.

Redraw facility

A redraw facility allows you to make extra repayments on your home loan. These additional funds can be accessed – or redrawn – if you need them, but in the meantime, the money in your redraw facility reduces the interest you pay.

Line of credit

If you need to make the occasional big-ticket purchase for renovations or a holiday, a line of credit can be useful. Think of it like a credit card that’s secured by your property. You only pay interest on the funds you use.

Low-doc loans

Low-doc loans require less financial documentation to prove your income, assets, and liabilities than a standard loan. They’re often used by self-employed borrowers or people with other borrowing hurdles.

These types of loans usually come with a higher interest rate than a standard mortgage and may include terms that restrict borrowers.

Ready to get started?

As your finance broker, we’ll line you up with the right home loan for your specific needs. Please reach out for assistance today and let’s chat through your requirements.

When you rent out your investment property, you can choose to manage the property yourself or get a professional property manager to do the hard yards for you.

The key benefit of getting someone else to manage your property is the convenience factor. You won’t be the one organising tradespeople if the property floods or the heater blows up.

A professional property manager can help maximise your returns by finding high-quality tenants, conducting thorough background checks, and ensuring their financials are sound, all while minimising vacancies.

Property managers offer a range of services, which may include:

• Rent advice
• Leasing expertise and advertising services
• Management of contracts
• Advice about tenancy legislation
• Inspections and hands-on management of your property.

Here are some tips for choosing the right property manager.

Do your homework

Research which property management companies service the area where your investment is located. You may opt for a full-service real estate agency or use a dedicated property management company.

Make sure you read their customer reviews, even if they’ve been recommended by family and friends. That’ll give you an idea of how others have found their services and what you can expect.

Stick to local professionals

A local property manager is likely to have a solid understanding of the suburb’s demographics, the kinds of tenants you’ll attract, and the right rent to charge.

This kind of local knowledge is extremely valuable when it comes to property management and will help you make informed decisions.

Make sure you understand the fees

Most property managers charge a fee based on a percentage of the rent. Others charge a flat fee amount.

There may be administrative fees, leasing fees at the start of a tenancy (usually a couple of weeks’ rent), advertising fees and additional charges for lease renewals.

Make sure you understand the fee structure and what you get for your money.

See how reachable they are

When something goes wrong with your property, you need to be able to reach your property manager fast. Test the waters and see how easy they are to communicate with.

Give shortlisted property managers a call and see how knowledgeable they are and whether they’re pleasant to deal with.

Do they only respond via email or text? Do they take a millennium to get back to you? Does their communication style work for you?

Don’t be afraid to ask questions

There are no silly questions, so ask prospective property managers anything you feel is relevant.

• What services do they provide?
• How do they manage maintenance tasks?
• What sort of properties are in their portfolio and how many?
• How do they manage rental payments?
• How often do they do inspections?
• Will they let you know about legislative changes that could affect your rental?

Asking lots of questions will help you choose the right property manager for your needs.

Let’s chat

If you’re in the market to buy an investment property, we can assist with the financial side of things. Please contact us to talk through your options.