Interest Rate Remains at Record Low 2.0%, but are Property Investors “Locked Out”?
Announcement posted by Purely Finance 24 Sep 2015
Broker for home loans and investment loans in Perth reveals why some property investors may not be able to take advantage of record low interest rates.
Perth, WA, 24 September 2015 - On 1st Sept 2015, the Reserve Bank of Australia (RBA) announced that it would leave the cash interest rate at its current all-time record low of 2.0%. Glenn Stevens, Governor of the RBA, cited numerous reasons for the decision.
Governor Stevens feels that the global economy is growing at a “moderate pace.” He cites a growing US economy, in tandem with a “softening” Chinese economy which is also affecting other East Asian countries, as factors combining to produce moderate growth.
In Australia, the economy is affected by commodity prices that are falling globally, lowering the “terms of trade” for Australian commodities. The Australian dollar remains low, keeping inflation in check. While employment is growing, unemployment is remaining steady. Housing prices in Sydney and Melbourne are rising, but the rest of Australian housing market is what Governor Stevens terms “broadly steady.”
Governor Stevens feels that the rate drops, which were designed to stimulate spending and borrowing, have done their job.
However, it isn’t all good news for those who expect to take advantage of low interest rates in the coming months. Governor Stevens stated that the RBA would “start increasing its policy rate over the months ahead.” He also stated that the RBA “is working with other regulators to assess and contain risks that may arise from the housing market.”
What Does This Mean to Property Investors?
Nick Aves is the Director of Purely Finance, a firm which combines mortgage brokers and financial planners to help people in the Perth area build wealth through buying investment properties. Mr Aves has been helping Perth investors for more than 30 years. He sees the market becoming a lot tougher for small property investors due to a new policy. According to Mr Aves:
“The current economy is in a perfect sweet spot for buying investment properties. Interest rates are at a record low and the real estate market in Perth has been flat for the last twelve months. However, Governor Stevens is making it clear that the record low interest rates are not going to last much longer. We think it is important for anyone who is thinking of buying their first investment property or adding to their current portfolio to do it as soon as they possibly can.”
However, Mr Aves sees another problem looming for investors: the decision by the Australian Prudential Regulation Authority (APRA) is forcing lenders to cap the growth of investment loans to a limit of 10% per annum. Many lenders are over their 10% limits, causing them to stop writing investment loans.
According to Mr Aves: “If you want an investment loan, you are going to have to go to a broker who knows which lenders are still writing investment loans and which lenders have criteria that fit the person applying for the loan. If you don’t have a great investment loan broker, you either won’t find a loan or you will get buried by the terms.”
Purely Finance brokers home loans and investment loans in Perth. They specialise in helping investors build wealth through property investing. They offer “one stop shopping” with financial planners and mortgage brokers in their Perth office. To learn more or for an “investor’s financial checkup,” call (08) 9453 8888 or visit their website: http://www.purelyfinance.com.au/.
Governor Stevens feels that the global economy is growing at a “moderate pace.” He cites a growing US economy, in tandem with a “softening” Chinese economy which is also affecting other East Asian countries, as factors combining to produce moderate growth.
In Australia, the economy is affected by commodity prices that are falling globally, lowering the “terms of trade” for Australian commodities. The Australian dollar remains low, keeping inflation in check. While employment is growing, unemployment is remaining steady. Housing prices in Sydney and Melbourne are rising, but the rest of Australian housing market is what Governor Stevens terms “broadly steady.”
Governor Stevens feels that the rate drops, which were designed to stimulate spending and borrowing, have done their job.
However, it isn’t all good news for those who expect to take advantage of low interest rates in the coming months. Governor Stevens stated that the RBA would “start increasing its policy rate over the months ahead.” He also stated that the RBA “is working with other regulators to assess and contain risks that may arise from the housing market.”
What Does This Mean to Property Investors?
Nick Aves is the Director of Purely Finance, a firm which combines mortgage brokers and financial planners to help people in the Perth area build wealth through buying investment properties. Mr Aves has been helping Perth investors for more than 30 years. He sees the market becoming a lot tougher for small property investors due to a new policy. According to Mr Aves:
“The current economy is in a perfect sweet spot for buying investment properties. Interest rates are at a record low and the real estate market in Perth has been flat for the last twelve months. However, Governor Stevens is making it clear that the record low interest rates are not going to last much longer. We think it is important for anyone who is thinking of buying their first investment property or adding to their current portfolio to do it as soon as they possibly can.”
However, Mr Aves sees another problem looming for investors: the decision by the Australian Prudential Regulation Authority (APRA) is forcing lenders to cap the growth of investment loans to a limit of 10% per annum. Many lenders are over their 10% limits, causing them to stop writing investment loans.
According to Mr Aves: “If you want an investment loan, you are going to have to go to a broker who knows which lenders are still writing investment loans and which lenders have criteria that fit the person applying for the loan. If you don’t have a great investment loan broker, you either won’t find a loan or you will get buried by the terms.”
Purely Finance brokers home loans and investment loans in Perth. They specialise in helping investors build wealth through property investing. They offer “one stop shopping” with financial planners and mortgage brokers in their Perth office. To learn more or for an “investor’s financial checkup,” call (08) 9453 8888 or visit their website: http://www.purelyfinance.com.au/.