Could Increased Mortgage Demand Foretell Rising House Prices?
Announcement posted by Smartline Rockingham 23 Aug 2013
Mortgage brokers serving Baldivis, Rockingham and Kwinana reveal why the housing market could see sharp gains within as little as a year.
Rockingham, WA, August 23, 2013 - Recently, a company called Veda, which provides data for the credit industry, released its quarterly report on consumer borrowing habits. According to the report, mortgage applications saw their largest growth in three years, with the June quarter rising by an annual rate of 6.9%.
Angus Luffman, who is the General Manager of the Consumer Risk division of Veda, stated that in his opinion, mortgage enquiries are representative of market demand and that a rise in the number of mortgage applications usually foreshadows a rise in the price of houses between six and nine months later. Luffman is also counting, as are many economists, on a rise in the housing market to compensate for the current slowdown of the mining boom.
The RBA interest rate is currently at an all-time low of 2.50% and many are predicting another RBA rate decrease, which would produce a rate of 2.25%. This, combined with housing prices that have remained fairly constant, are credited as factors that are stimulating market activity.
Overall consumer demand, however, only grew at an annual rate of 3.9% for the June quarter, which is a decrease when compared to the March quarter's rise of 4.7%. This is seen by many economists as the ultimate and definitive measurement of consumer confidence but many in the housing business don't believe that it has a lot of bearing on the housing market. Personal loan applications showed 6.3% annual growth during the June quarter but this was down from 10.3% in the March quarter.
Justin Smith, principal of The Mortgage Gallery Rockingham, which brokers home loans in the Kwinana, Baldivis and Rockingham areas, believes that the current market situation represents opportunity but that the window of opportunity may be closing soon. As of him, “The housing market is in a unique situation now but history suggests that it will soon move to a more conventional position.”
Smith elaborated, “Economic indicators such as consumer confidence, income and employment are in a good position, indicating that consumers feel they have money to spend on housing. In addition, it costs almost as much to rent in Perth as it does to buy and it actually cost more earlier this year before the market began to adjust. Also, the RBA is still cutting interest rates and lenders have been passing the cuts down to their customers.”
Smith continued, “Still, housing prices haven't risen commensurate with the rest of the economy's numbers. This creates a situation where housing prices are actually low relative to the rest of the economy. Usually, situations like this don't last long and the recent rise in home loan applications indicates that the market will soon adjust itself. When that adjustment happens, housing prices will rise and the window of opportunity for buyers to find homes that are relatively underpriced in comparison to other market indicators will be closed.”
Smith concluded, “The most reliable housing market indicator now predicts that prices will rise soon. If you are thinking about buying a home, buy now or you could cost yourself thousands of dollars over the duration of a 30 year loan.”
The Mortgage Gallery Rockingham is a firm of mortgage brokers which serves Rockingham, Baldivis and Kwinana. Their friendly and knowledgeable staff
help you choose from multiple products offered by over 22 of Australia's largest and best financial institutions to select the right mortgage for your financial situation. Call (08) 9527 1800 today for more information, or visit their website: http://www.themortgagegalleryrockingham.com.au/.
Angus Luffman, who is the General Manager of the Consumer Risk division of Veda, stated that in his opinion, mortgage enquiries are representative of market demand and that a rise in the number of mortgage applications usually foreshadows a rise in the price of houses between six and nine months later. Luffman is also counting, as are many economists, on a rise in the housing market to compensate for the current slowdown of the mining boom.
The RBA interest rate is currently at an all-time low of 2.50% and many are predicting another RBA rate decrease, which would produce a rate of 2.25%. This, combined with housing prices that have remained fairly constant, are credited as factors that are stimulating market activity.
Overall consumer demand, however, only grew at an annual rate of 3.9% for the June quarter, which is a decrease when compared to the March quarter's rise of 4.7%. This is seen by many economists as the ultimate and definitive measurement of consumer confidence but many in the housing business don't believe that it has a lot of bearing on the housing market. Personal loan applications showed 6.3% annual growth during the June quarter but this was down from 10.3% in the March quarter.
Justin Smith, principal of The Mortgage Gallery Rockingham, which brokers home loans in the Kwinana, Baldivis and Rockingham areas, believes that the current market situation represents opportunity but that the window of opportunity may be closing soon. As of him, “The housing market is in a unique situation now but history suggests that it will soon move to a more conventional position.”
Smith elaborated, “Economic indicators such as consumer confidence, income and employment are in a good position, indicating that consumers feel they have money to spend on housing. In addition, it costs almost as much to rent in Perth as it does to buy and it actually cost more earlier this year before the market began to adjust. Also, the RBA is still cutting interest rates and lenders have been passing the cuts down to their customers.”
Smith continued, “Still, housing prices haven't risen commensurate with the rest of the economy's numbers. This creates a situation where housing prices are actually low relative to the rest of the economy. Usually, situations like this don't last long and the recent rise in home loan applications indicates that the market will soon adjust itself. When that adjustment happens, housing prices will rise and the window of opportunity for buyers to find homes that are relatively underpriced in comparison to other market indicators will be closed.”
Smith concluded, “The most reliable housing market indicator now predicts that prices will rise soon. If you are thinking about buying a home, buy now or you could cost yourself thousands of dollars over the duration of a 30 year loan.”
The Mortgage Gallery Rockingham is a firm of mortgage brokers which serves Rockingham, Baldivis and Kwinana. Their friendly and knowledgeable staff
help you choose from multiple products offered by over 22 of Australia's largest and best financial institutions to select the right mortgage for your financial situation. Call (08) 9527 1800 today for more information, or visit their website: http://www.themortgagegalleryrockingham.com.au/.