Experts say there are some things you need to know about the RBA’s rate hike – it might come as a pleasant surprise.
The impact of the first rate hike in nearly 12 years could be offset by a series of factors strengthening the housing market, while borrowers could continue to save on interest rates by shopping around.
Although prices have fallen further in the country’s two biggest cities, real estate and finance experts have chimed in with a list of things homeowners and home buyers should keep in mind – and the news are not all negative.
Government home ownership initiatives, strong employment figures, rising wages and the return of open borders are creating tailwinds for real estate, despite the rising cost of loans.
While a cash rate hike has been passed on to Australia’s big four banks, data from Rate City shows smaller lenders are offering rates below 3%.
Ray White Chief Economist Nerida Conisbee said the housing market had entered a “new cycle” after two years of 30% growth, but population growth, infrastructure investment and the long-term decline term household debt created solid conditions.
“House prices are very sensitive to interest rates, especially in areas with high housing debt, such as some suburbs of Sydney and Melbourne,” she said.
“However, they are not the only influence and in some places other factors are more important.”
“Employment is very strong and wages are rising, population growth is expected with the return of open borders and infrastructure spending is at record highs.”
She added that the high cost of construction would continue to put upward pressure on prices.
“Rising construction costs will increase the cost of new and renovated properties, thereby increasing the cost of replacing all existing properties,” she said.
“Right now, construction costs are rising rapidly, and in the longer term they will have a major influence on house prices.”
Lendi Group CEO David Hyman said interest rates had risen for several months before the RBA’s cash rate hike.
He said a high proportion of borrowers might miss lower interest rates without even realizing it.
“While we’ve seen a slight increase in home loan refinance activity over the past 18 months, the reality is that $500 billion in loans hasn’t been touched in more than five years, according to reports. of the Boston Consulting Group,” Hyman said. mentioned.
“There are a number of opportunities for mortgage holders to get a head start on their finances in a rising rate environment. This includes considering refinancing and taking advantage of lower interest rates while they last.
Rate City research director Sally Tindall said borrowers could create their own interest rate cuts by voting with their feet.
“The average variable-rate homeowner pays more than 1% more than the rate offered by low-rate lenders,” Ms Tindall said.
Originally published as Borrowers could still save despite rising RBA rates