Currently the cash rate is at 3.60% and forecasts are that it will peak to somewhere between 4.1% and 4.35% this year with an expected 1 to 2 more rate rises over the next 6 months. Putting this in context, interests rates are back around the level they were 10 years ago but are still substantially lower than the 7% (approx) they reached 15 years ago.
Securing a loan under 4.5% is still a very affordable outcome for borrowers (investors can expect to pay an additional 0.25%). Lenders will apply an additional 3% when assessing eligibility (as a buffer against further rate rises) and that total will determine the amount a purchaser can borrow.
If a buyer requires finance to purchase a home, it’s advisable to get pre-approval as the first step before starting a search. Formal pre-approval generally lasts for 90 days and will give the buyer certainty as to the loan amount and the confidence to bid at auction. If that 90 day period lapses then another pre-approval should be sought to reflect any changed circumstances.
If you are looking to buy, we can assist you with recommendations for a legal representative and mortgage broker. Feel free to speak to one of our experienced sales team.
Until next week,
Nick Lord (Director)