A Trifecta You Can Bet On

With punters gearing up for ‘the race that stops a nation’, it would be easy to miss the other big event that took place this afternoon: ‘the news that stops a heartbeat’ or the Reserve Bank’s interest rate decision. Here at UNO, we were waiting in anticipation for the latter, because hey – we’re in the business of home loans. And while historically, the Melbourne Cup is a popular date for a change in interest rates (did you know that between 2006 and 2011 the RBA moved them for six years straight?), it’s now been six years since the bank made a move in November. Today, the RBA chose to stay put for a 13th consecutive month, keeping the cash rate at 1.50%. Which leads me to why we were waiting in such anticipation for the RBA announcement. (Okay, we admit it was kind of fun watching the winning trifecta in the Melbourne Cup and yes, we might have had a champagne in hand.) But to be perfectly honest, there was a better reason to be excited. You see, there’s actually a trifecta happening right now in home loans. With interest rates low, property prices cooling and seven weeks to settle before Christmas, this unique moment in time would have bookies in a frenzy. It’s possibly one of the best times in history to consider taking out a home loan. UNO’s chief financial officer got pretty animated about it last week, calling it a “property sweet spot”. “Inflation figures last week indicated price weakness except for rising electricity and gas prices, leading to the inflation rate remaining below the RBA target of 2-3%,” he said. “What this typically means is that the central bank would reduce rates to give things a kick along. “They’re not going to do that in fear of stoking the property bubble further. There’s only one direction they can go from here.” He said almost all economists are tipping two 25 basis point increases at some point next year. But before that happens, there’s a window right now where these three things – low interest rates, cooling property prices and Christmas – are aligning to benefit home buyers and those looking to refinance. For home buyers: Why now might be the best time in history to consider a home loanFor home owners: Why now might be the best time in history to refinance

Homebuyers, here’s why:

1. Interest rates are low

The September quarterly growth figures showing weak inflation growth – even with soaring electricity prices – suggest interest rates will remain stable for some time to come. September’s figures were the third strongest in four years at 0.6%, yet the annual inflation growth of 1.9% remained below the RBA’s target range of 2-3%. The reason for this is electricity prices, which rose 8.9% this quarter, according to the ABS. If it weren’t for rising electricity prices, the RBA would be reducing the cash rate – to boost the economy, which is essentially flat. But for now, the bank’s expectation is that growth in the Australian economy will gradually pick up over the coming year.

2. Property prices are cooling

According to Domain, this financial year’s clearance rate for houses now averages about 62%, well down from the 72.9% clearance rate over the same time frame last year. Capital gains across Australia’s housing market have also been losing momentum since moving through a peak rate of growth in November 2016, according to CoreLogic. National dwelling values remained unchanged during the month of October and conditions were flat across both the combined capital cities and the combined regional areas of Australia, with negative movement in values over the three months ending October recorded in Sydney (-0.6%), Perth (-0.7%) and Darwin (-4.4%). “Seeing Sydney listed alongside Perth and Darwin, where dwelling values have been falling since 2014, is a significant turn of events,” CoreLogic’s head of research, Tim Lawless said, adding that despite a stronger growth profile, Melbourne dwelling values are also rising at their slowest quarterly pace since mid-2016. Source: CoreLogic

3. It’s seven weeks ’til Christmas

For houses on the market now, it’s a sure thing their owners want them sold, packaged up and shipped out by Christmas – which is only seven weeks away. “Vendors like to be in the new house for Christmas or settled before school starts in the new year,” says Michael Pickham from Propertunity Buyers Agents. “Christmas time can be a great time to snap up a deal as sellers just want their house sold. With seven weeks out to Christmas now we’re in a little bit of heat as the vendor doesn’t want the uncertainty of having a property on market over the holiday season.” With these three things in mind, the time could be ripe to buy a house that has passed in at auction or is failing to attract the excitable bidding that agents rely on to push prices to ridiculously high levels. I should know. My partner and I searched for a home for months, finally securing a property at auction just over six weeks ago – for less than the reserve price. All in all, it’s the perfect property trifecta. Want to know more? Read Choosing the Right Home Loan

Home owners, here’s why:

1. Interest rates are low

The September quarterly growth figures showing weak inflation growth – even with soaring electricity prices – suggest interest rates will remain stable for some time to come. September’s figures were the third strongest in four years at 0.6%, yet the annual inflation growth of 1.9% remained below the RBA’s target range of 2%. The reason for this is electricity prices, which rose 8.9% this quarter, according to the ABS. If it weren’t for rising electricity prices, the RBA would be reducing the cash rate – to boost the economy, which is essentially flat. But for now, the bank’s expectation is that growth in the Australian economy will gradually pick up over the coming year. With lenders offering competitive rates and reduced fees, it’s never been a better time to take advantage of them and refinance to get a better deal. Hey, when you look back on this period ten years from now, will you see it as the once-in-a-generation opportunity it was to pay down your mortgage while interest rates were low?

2. Property prices are cooling

According to Domain, this financial year’s clearance rate for houses now averages about 62%, well down from the 72.9% clearance rate over the same time frame last year. While there certainly hasn’t been a “property crash”, if property prices were to drop further, it might be harder to negotiate a better rate with your lender as your LVR is likely to increase if the cost of your property drops. Right now, your debt is a lower portion of the value of the property, meaning it could be the best time to refinance.

3. It’s seven weeks ’til Christmas

Finally, with Christmas just around the corner, everyone’s looking at ways to save for that much-needed holiday, presents for the kids or a seafood lunch for the family. Last Christmas, UNO calculated that the average Sydneysider could save $3408 a year through refinancing. In Melbourne it’s $2532*. Lenders often work to targets and are super hungry to do deals and settle them before the end of the quarter (end of December). With these three things in mind, now could be a great time to consider refinancing. After all, it’s the perfect home loan trifecta. Want to know more? Read Thinking of Refinancing? Here’s How to Get the Best Deal for You* This saving is based on the median Sydney house price of $995,804 and a median Melbourne house price of $740,000, at an 80% LVR, assuming an original interest rate of 4.5% and a refinanced rate of 3.89%.This information in this article is general only and does not take into account your individual circumstances. It should not be relied upon to make any financial decisions. UNO can’t make a recommendation until we complete an assessment of your requirements and objectives and your financial position. Interest rates, and other product information included in this article, are subject to change at any time at the complete discretion of each lender. Book a call in with UNO

Book Call Now

Book Call Now

UNO home loans

Need help with your home loan?

UNO Brokers are available night and day for a quick review or your situation and bring expertise that will support better decision making that will save you time and money. Book in a quick call when it suits your busy schedule

Get Started

Related Articles

TESTIMONIALS

What our customers are saying

A M
June 21, 2024
I only have praise from my Uno experience! I was a broker sceptic, having done all of the hard work myself for my first two property purchases and sale. I'm now a proud broker advocate having used UNO (Karis Churchill) for two refinances and purchase. The value add Karis brought cannot be underrated! Not only has Karis got me the best rate, with a bonus cash back (nearly unheard of in this climate), she has done it with the least back-a-forth and with the least administrative burden on me (the thing that can deters people from refinancing to begin with). Karis is always on top of everything. Karis knows her stuff. She is the most responsive of any professional service provider I've ever used (my banker never text with an update at 7pm on a Sunday) without being overbearing. You know she's got your back and in my experience the value speaks for itself. Thank you to the whole UNO team, thank you especially to Karis.
Read more
Leanda Cawdry
June 8, 2024
Very pleased with the outcome of this process, Michael Parsons and his team at UNO were helpful, communicative, and took all the stress out of the process of finding me a refinance deal that met my needs. Would definitely recommend Michael and UNO, and I already have!
Read more
Glen Matthews
May 29, 2024
Regarding UNO Home Loan services. I had great experience with uno home loans, Michael parsons was my broker for UNO Home Loans we had excellent communication throughout the whole home loan application. If I had any questions on home loan application which were many were answered in great detail. He had the time to assist me in filling out endless application forms at anytime through the day or night which made the application process stress free. So I would strongly recommend Michael parsons from UNO Home Loans to try his services you will not be disappointed. Thanks to Michael parsons I have the lowest home loan interest rate I could ever hope for which I particularly ask for. It’s was a pleasure working with him. And will be using his services in the near future.
Read more
Gillian Anderson
May 28, 2024
Thank you to Michael and UNO for their help in securing our home loan. I like the way they break everything down in simple terms to ensure that you can make the right decision. Michael was polite and very patient to help us get things across the line. We are now sitting in our first home away from rental circus. Can't recommend them enough. Thanks Michael and thanks UNO
Read more
Andy Song
May 17, 2024
Amy has been absolutely wonderful as a broker. I would not hesitate one bit in recommending her services.
Read more
Troy H
May 13, 2024
Scott Wilkinson did a great job as my broker. He was very patient and always happy to answer my numerous questions throughout the considerable period of time that it took to secure a suitable property. Would certainly recommend Scott and the team at UNO for anyone seeking a broker.
Read more
Elvin Singh
May 10, 2024
First time I have used a Broker and I must say Andrew Wyers and his team were amazing to work with and handled my refinance from a Big4 bank. He was able to understand my needs and find a lender that will be able to help me grow my investment portfolio. Andrew and his team kept me updated as part of my refinance journey and made the process super easy and I was able to refi to new lender in under 2 weeks. Would highly recommend Andrew.
Read more
Nadine Steffens
April 19, 2024
Scott and the team at Uno are absolutely 💯 amazing. I don't think I could have done my loan on my own. They are highly motivated and I do recommend them.
Read more
Andrew
April 16, 2024
Dealing with Scott Wilkinson was an absolute delight. Scott is tenacious, hard working and readily available. He made a very stressful process for me and my partner smooth sailing. Would highly recommend.
Read more
Liam Sugiono
April 15, 2024
Amy and her team were efficient and knowledgeable as our broker. They were easily contactable and ensured all our needs were met.
Read more
Mike Vincent
April 10, 2024
Andrew is the best broker I have worked with and one of the few people who understands the investment journey from both a personal and professional standpoint. Andrew is an asset to anyone from a first home buyer to a seasoned investor.
Read more
Yu Su
April 9, 2024
Amy was very help and quick respond when I have questions. Really recommended.
Read more