On March 19th the RBA announced it’s Interest rate cut to be slashed 0.25% the lowest ever recorded in history and banks have been quick to pass on this reduction. I speak to Peter Beverley from Oxygen Home Loans on how interest rates are affecting your home loan and how you can benefit.
So Peter… can you tell us about what’s going on with home loans and how it is affecting borrowers?
An artificial situation created due to COVID-19 has seen the RBA reduce rates to 0.25% at the end of March. Banks have been quick to pass on this reduction and for the first time we are being offered fixed rates at 2.14% – 2.29%.
Combining this with the decision from APRA in mid 2019 to relax stringent lending restrictions on banks and other financial institutions, borrowers can generally borrow more money today.
I have examples of people who were only able to borrow $800,000 two years ago and can now borrow $1 million.
With unprecedented low rates, meaning lower repayments. I imagine that these repayments are less than what many people would be paying in rent.
For homeowners that have an existing lender, they can take that fixed loan and switch products. They could keep some of their loan variable with an offset and then take advantage of the new low fixed rate. Borrowers can do this and save thousands.
I suggest people think about staying with their existing lender and look at changing products, it may only require a phone call or to fill in a form, depending on the process with your lender.
My Conclusion as to how this is affecting the market
Daily people are asking me what the market is doing as a result of all these changes. It’s very hard to predict what the future holds but what we know today is that there is very little stock on the market (comparatively), very attractive borrowing conditions and a pool of buyers that are relatively unaffected by the current economic or business activity restrictions, therefore, it’s encouraging to know we are still having good results in uncertain times.
If you would like to know more about the market on the Upper Northern Beaches, I would love to chat through options and help you move forward on your property journey. Contact me today.