The Reserve Bank of Australia (RBA) today announced it will cut the cash rate by .25 percentage points. This is the third time the cash rate has been cut this year, taking it to 3.60%.
This is great news for many homeowners with a variable rate, who may find their repayments decrease, and aspiring homebuyers, who may find their borrowing capacity increase.
But what does this mean for the property market?
Competition heats up for spring
As we approach the spring property season, Loan Market data shows a 53% uptick in home loan pre-approvals over July compared to a year ago. At the same time, Ray White data shows listings are down 14.2% compared to this time last year. As interest rates ease, aspiring buyers are finding their borrowing capacity is increasing, adding pressure to an already competitive market.
The cash rate drop of 0.25 percentage points means a buyer earning $120,000 a year could see their borrowing capacity increase by around $42,000 compared to the start of the year.
Across the states, buyers are readying themselves for September’s arrival, with pre-approvals rising across the board, year-on-year:
- South Australia / Northern Territory – 80% increase;
- Western Australia – 79%;
- NSW / ACT – 49%;
- Queensland – 48%;
- Victoria / Tasmania – 46%.
Typically in many parts of the country, more listings come into the market in spring. More listings mean more choice for buyers, which could help keep a cap on the acceleration of property prices.
What can you do to make yourself more competitive?
With this surge in competition, there are a number of steps you can take to stand out as a potential buyer.
- Get your finances sorted to show agents you are serious
- Do your research by getting property reports from your broker and understanding prices in the area
- Visit open homes in your area to get a feel for buyer interest
- Understand what conditions you may need in a contract and consult a conveyancer if needed
- Consider if a buyers agent is right for you, particularly if your market is highly competitive
Your Loan Market broker can have a look at your circumstances to help you devise a plan to get into the property market or buy your next property. This includes comparing over 60 lenders to find the right loan for your goals. Find a broker near you.
