PHOTO: Is now the right time to jump in? Image: Getty
Australia’s median property value fell 0.6 per cent in July and is tipped to fall anywhere between a few more percentage points and a whopping 32 per cent.
But according to Aussie Home Loans chief customer officer David Smith, that doesn’t mean prospective buyers should hold off on their purchasing decisions.
“We have seen a drop in house prices recently, but the price falls are smaller than first predicted during the height of the pandemic. So, if you were ready to make your move and aimed to reach your home goal this year, there is no reason why this should stop you if it’s the right time for you,” Smith said.
He said finding a home is a personal journey, so it’s important to seek help navigating the different market conditions. Generally speaking, however, those waiting to purchase due to hopes of significantly cheaper house prices were labouring under a “myth”.
Smith busted four other property market myths:
Aussies should wait until interest rates drop further before buying
“When it comes to interest rates, predictions vary. Some Australians believe the 0.25 per cent interest rate is here to stay and there is no need to take advantage of it just yet, asking themselves, why now when I can wait? While others are waiting for it to drop to a zero rate, and there is even some speculation about a negative interest rate,” Smith said.
Practically speaking, it’s impossible to know how interest rates will change, he added. The Reserve Bank of Australia itself has flagged 0.25 per cent as its interest rate floor, and said it will be some years before rates increase. And independent economist Stephen Koukoulas has also told Australians to prepare for years of record low rates.
Smith said now is a good time to lock in a low interest rate, and can save thousands of dollars down the line.
Refinancing is too hard and risky
With interest rates at record lows, Smith said refinancing “shouldn’t be a scary word”.
“By refinancing you can benefit from a variety of things as it enables you to release equity from your property. Another benefit could be having extra cash on standby, as you could take advantage of the lower interest rates to lower your monthly repayments and save money in the long-term or use it to increase your cashflow by taking advantage of the cashback offers that some lenders are offering their customers.”
And if your job is secure, refinancing could even help you pay off your loan faster by making additional repayments and lowering interest.
But if borrowers are concerned about how the pandemic is impacting their loan, they should consider speaking to an expert like a broker before beginning the refinancing process.
It’s harder to get a loan during Covid-19
Most (70 per cent) of Australians believe job security will prove a challenge in achieving their property goals, Aussie research revealed. And less than half believe 2020 is a good year to buy property, down from 76 per cent in January.
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