There has been talk that rate rises are likely to happen in the back half of 2018. Ms Auld, JP Morgan’s chief economist, disagrees commenting “Until we see higher wages, the Reserve Bank can’t be confident about getting inflation back to target, so this whole story of rate hikes feels a long way off ,” Domain reported at the end of last year. Similarly Chief economist at Westpac, Bill Evans commented that most are saying 1 or 2 rises in late 2018, but he predicts no rate changes for the next 3 years. Rate rises are set to hurt Sydney mortgage holders the most with the median mortgage in NSW being $456,100 according to ABS data released in November 2017.
Meanwhile, the RBA isn’t giving any hints as to when the rise will happen as it’s likely this will send the Aussie dollar higher, hurting exports and affecting the strength of the economy which the RBA is trying to avoid.
And while low interest rates are in play, first home buyers are more likely to be able to enter the property market. Domain reported this month that ME Bank Head of Loans, Patrick Nolan, commented “They will continue to benefit from competitive interest rates, new concessions (if eligible) and ample apartment stock, although checks should always be made to ensure quality buys.”
Although first home buyers still often need assistance with a deposit to enter the market, once they are in the market “low interest rates mean that repayments are affordable” economists Mr Gradwell and Ms Masters also commented in an article from Domain in December last year.
Slight upward trends in rates combined with historical low interest rates, is prompting many clients to discuss the options available with fixed rates. Regardless of what the RBA decide, banks and lenders aren’t obligated to pass on the rate cut to their customers, which makes it even more important to engage a broker so customers can be sure they are getting a competitive deal and comparing what the big four are offering as well as all the small lenders out there.