We’ve taken a look back on 2020 to appreciate some of the positives the year has presented and how these highlights could help you and your finances heading into the new year.
1. Record low interest rates
The Reserve Bank of Australia (RBA) reduced their cash rate to an all-time low of 0.1% in November and we’ve already seen some home loan rates with a 1 at the beginning of them. The RBA have indicated they expect rates to remain at this level for the next three years, unless employment and inflation pick up – more people in more jobs, spending more.
With rates expected to be low for a long time, it’s a good opportunity to see how you can make the most of the market. The benefit you have as a borrower is the length of time that rates are expected to be at these very low levels:
- First home buyers: it’s a great time to settle in to managing your first home loan commitment
- Upgraders: have confidence to take the next step, knowing rates should stay low now for some years to come
- Refinancers: there’s never been a better time to see if you can get a better rate. Competition amongst lenders is fierce so you could be up for a good deal
- Renters: in many locations across Australia, it’s now cheaper to buy than it is to rent – this trend should continue into 2021 with vacancy rates decreasing across the country and rents rising.
Want to know what record low rates could mean for you?
- Check out our repayments calculator to compare your current weekly rental costs to the cost of repaying a home loan.
- Try our affordability calculator to see how much you can borrow at record low interest rates
- Or compare rates to see if you could save by refinancing
- And of course, reach out to our mortgage brokers who can help you take the next step in 2021.
2. Grants and more grants
The federal government introduced the HomeBuilder grant and some state governments introduced local grants to help Australians to buy or build a home during the pandemic. The great news is, the HomeBuilder grant has been extended into 2021 with a revised amount of $15,000 for contracts signed between 1 January and 31 March 2021.
The First Home Loan Deposit Scheme was also introduced in 2020, which allowed some buyers to get into the market with just 5% deposit, and no payment of Lender’s Mortgage Insurance (LMI) – saving them thousands of dollars. This scheme has been extended into 2021.
As well as these, the First Home Owner Grants and stamp duty concessions still apply across the country and vary in each state. Your local broker can help you find out what you can qualify for.
If you missed out on the first round of grants or First Home Loan Scheme, or didn’t qualify before, get it touch and we can see if you qualify now. Because in addition to the grants, the federal budget also saw a decrease to personal tax rates meaning your borrowing capacity could now be greater, so it’s worth speaking to a broker to reassess your personal situation.
3. Property markets are forecast to grow
Property markets certainly slumped during the peak of the COVID-19 lockdowns, and took an even greater hit in Victoria, but by all accounts markets are tracking back up and many leading economists are predicting them to grow, in line with pre-COVID-19 trends.
This is great news for those who have been waiting for a rebound in certain markets, but also an indication that market sentiment is rising, and prices could continue – so for those looking to get in, now could be a good time.