An interest rate cut could see renewed buyer confidence and increased activity across the property landscape in Oz as a result of increased servicability !
- A 0.25 of a percentage point rate cut would increase borrowing capacity by 2.5 per cent.
- A 1 per cent rate cut could increase the amount that buyers could borrow by around 10 per cent to 13 per cent - increasing borrowing capacity by $100k and reduce monthly mortgage repayments on a $1 million loan by around $594 a month.
What does this mean for the mortgage market in Australia?
✔️ Increased Borrowing Capacity: Lower interest rates can boost affordability, enabling more Australians to enter the property market.
✔️ Refinancing Opportunities: Existing homeowners may look to refinance, capitalizing on better rates to reduce repayments.
✔️ Competitive Lending Environment: Lenders will likely ramp up their offerings, intensifying competition and driving innovation in mortgage products.
For those of us in the mortgage industry, it’s a pivotal time to support clients with strategic advice, helping them navigate both opportunities and challenges in this evolving landscape.
Source AFRs Nila Sweeney from AFR https://www.afr.com/property/residential/sydney-s-housing-downturn-could-end-before-election-20250120-p5l5p5
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