Interest Rates in Australia Expected to Rise: Why Now is the Ideal Time to Invest in Property
Interest rates play a crucial role in the Australian economy, affecting how much people spend and the housing market’s health. As we approach the end of 2024, experts predict a rise in interest rates due to inflation, economic growth, and the Reserve Bank of Australia (RBA) policies. This expected increase makes now a great time for those thinking about buying property to act quickly. Here’s why buying property now, before rates go up, can be a smart financial decision in the Australian market.
Predictions for Rate Increases
The RBA and financial experts suggest that the official cash rate might go up by 0.25% to 0.50% by the end of the year; This increase is meant to control inflation and keep the economy growing steadily.
The RBA’s decision will also depend on what’s happening in the global economy and factors like wage growth and consumer spending at home.
Current Interest Rate Environment
Interest rates in Australia have been kept very low to help the economy recover from the COVID-19 pandemic and the Reserve Bank of Australia has set these low rates to encourage people to spend and invest. As of mid-2024, the official cash rate is at 4.10%, much lower than in previous decades – with Australians holding large mortgages and debt, any change in rates could have a big impact on those that may have overleveraged over the past few years.
The Impact of Rising Interest Rates on Property Buying
When interest rates rise, borrowing money becomes more expensive. This means that if you have a mortgage, your monthly payments could go up.
For example, if you have a $600,000 mortgage, a 1% increase in the interest rate could raise your monthly payments significantly. At a 6% interest rate, your monthly payment on a 30-year loan would be around $3,598. If the interest rate goes up to 7%, the payment could increase to about $3,992, adding an extra $394 to your monthly expenses.
Additionally, as the interest rates increase, people’s borrowing capacity decreases. This can often allow the buyer to purchase the property for a competitive price due to the lack of affordability and competition.
Why Now is the Time to Buy Property
Future Appreciation: Over time, as interest rates stabilize or decrease, property values are likely to rise due to increased demand and affordability. Buyers who enter the market now can benefit from this future appreciation, building equity as property values increase.
Leveraging Future Economic Growth: Economic growth often leads to increased wages, higher employment rates, and greater consumer confidence. These factors contribute to higher demand for housing, driving property prices up.
Investing in property now positions buyers to take advantage of these positive economic developments.
Strategies for Prospective Buyers
If you’re thinking about buying property in Australia, consider these tips:
Get Pre-Approved: Get pre-approved for a mortgage to understand how much you can borrow; This will give you a better idea of what you can afford and make you a stronger buyer. Talking to a mortgage broker can also help you find the best loan options.
Offer Favourable Terms: With pre-approval, you can offer better terms when buying. For example, instead of a standard 28-day finance approval period, you could offer 14 days or even 7 days if your broker advises it, this can make your offer more attractive to sellers.
Act Quickly: If you find a property that fits your needs and budget, move quickly to secure the property before other buyers or before rate hikes reduce your borrowing capacity making the property unaffordable.
Conclusion
With interest rates expected to rise by the end of 2024, now is a compelling time to invest in property in Australia. Buying real estate now can be a wise financial move because of the potential for property value growth and Buyers should act decisively to make the most of the current market conditions.
Who is Hindsight Finance
Hindsight Finance, based in Brisbane, is a mortgage brokerage that focuses on providing personalized financial solutions. The director of Hindsight Finance is Jesse Hinds who has 10 years’ experience in the finance industry. He has built a team who strive to excel with providing exceptional service to their clients and their referral partners.
They aim to simplify the loan process by understanding their clients’ current and future goals, ensuring they get the best possible deal from over 40 lenders across Australia. Hindsight Finance offers continued support even after the loan is settled, regularly reviewing it to ensure it remains suitable for their clients’ needs.
How can Hindsight Finance help your clients?
The key in any sales business is speed and that is what Hindsight finance can deliver. This will allow you to know if the client you are working with is eligible for the required lending and if you should continue to pursue this client or provide them assistance to get them ready to proceed.
Additionally quick pre-approvals, using their extensive network of over 40 lenders, they can quickly determine if a client is suitable for a loan and provide a pre-approval in a timely manner. This can often be completed within a few days, depending on the complexity of the client’s financial situation.
Clients have direct access to their broker, who provides constant updates and is available to answer any questions, ensuring transparency and clarity throughout the process.
How can Hindsight Finance help me close more deals?
Generally, the sticking point with sellers or buyers who own is “I need to sell before I buy”. We can provide bridging finance or other finance solutions to allow the client to sell their existing property while moving into their new purchase. In some instances, we have been able to assist agents in picking up the listing of the sale for the buyer which allows a smooth transition for the clients and provides the agent with another listing.
Does Hindsight Finance provide updates to me?
We ensure that both the real estate agents and their clients receive regular updates throughout the loan process. This includes expected timelines for each stage of the loan application.
Even after the loan is settled, we continue to monitor the loan and the client. With the tracking of referral partners, Hindsight Finance refers business back to the original referral partner. This allows you to have an additional contact point in your corner supporting your business for future sales/purchases.
How to contact Hindsight Finance?
The best contact is Jesse Hinds on 0450 628 202 or jesse@hindsightfinance.com.au to discuss how we can work together.
For your clients, feel free to provide:
Our website for further information: https://www.hindsightfinance.com.au/
Our booking link to book an appointment: https://calendly.com/hindsightfinance/30min or
Our best contact number: 0450 628 202.
