Property Finance Update - November 2024

The busy spring selling season has seen many aspiring homeowners out and about looking for the perfect property to snap up. 

If you’re planning to be in a new home before the new year, make sure you get your finance pre-approved early. That way, you’ll be able to dive in when you find the right property for your needs. 

Interest rate news 

At its latest meeting, the Reserve Bank of Australia (RBA) left the cash rate unchanged at 4.35 per cent. 

While the latest inflation data was promising, the RBA said underlying inflation remained too high. 

Headline inflation was 2.8 per cent over the year to the September quarter, down from 3.8 per cent over the year to the June quarter. It was the first time annual CPI has been under the 3% upper limit of the RBA’s target range since the March quarter of 2021. 

While the inflation news was welcomed by homeowners, the RBA said part of the decline reflected temporary cost of living relief.  

“Abstracting from these effects, underlying inflation (as represented by the trimmed mean) was 3.5 per cent over the year to the September quarter,” the RBA said in a post-meeting statement. 

“This was as forecast, but is still some way from the 2.5 per cent midpoint of the inflation target.” 

The RBA doesn’t expect inflation to return sustainably to the midpoint of the target until 2026. (See chart below).

Source: RBA - Statement on Monetary Policy - November 2024

Interest Rate Forecasts

The last RBA cash rate decision for 2024 will be announced on 10 December. Economists anticipate a cash rate cut is likely in the first half of 2025. 

The 4 major banks predict a rate cut in February or May 2025 with 3 to 5 rate cuts in total.  In contract to this, the futures market where fund managers make investment bets on future interest rates, implies that there will only be 2 rate cuts over the next 18 months, one in by June 2025 and the second by December 2025. (See chart below).

Fixed rates

If you are already stretched as it is and need an interest rate reduction sooner, there are 2-year fixed rates on offer as low as 5.49%* that can save $6,800 p.a. in repayments on a $1m loan currently on 6.25%.

To find out how your current home loan compares to others, get in touch today. 

Source: ASX - RBA Rate Tracker

Home value movements 

National dwelling values increased 0.3% in October – the 21st month of growth since February 2023, according to CoreLogic. 

Perth topped the leaderboard, with housing prices increasing 1.4% over the month. On the other hand, values dropped in Darwin (-1.0%), Canberra (-0.3%), Melbourne (-0.2%) and for the first time since January 2023, in Sydney (-0.1%). 

Meanwhile, there’s been a rise in advertised stock levels, creating weaker conditions in some markets, as buyers have more choice and less urgency to purchase. 

“Total listings are now 13.2% above the previous five-year average in Sydney and 13% higher in Melbourne,” CoreLogic research director Tim Lawless said. 

“Despite the rise in listings across the mid-sized capitals, Perth, Adelaide, and Brisbane are still seeing advertised stock levels more than -20% below the five-year average for this time of the year.  

“These markets remain well and truly in favour of sellers, although the balance is starting to gradually improve.”

With interest rates on hold and prices coming down in several capitals, now could be a good time to start planning a property purchase.

Talk to us about pre-approval and let’s make it happen.

*Comparison rate 7.93%. Comparison rate calculated on a $150,000 secured loan over a 25-year term. WARNING: Comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.