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Interest Rates Predicted to Fall

9 Feb 2015 Ballajura 0 Comment

Interest Rates Predicted to Fall

Major banks and financial experts are predicting that the already low Australian interest rates will fall further in 2015. Lower interest rates encourage home buyers and the real estate market benefits from increased activity.

The official rate has plateaued after it fell to 2.5% in 2013 and NAB and Westpac have recently suggested it will drop to 2.0% this year. SQM Research and the Real Estate Institute forecast a growing real estate market as a result, stating that low interest rates and the prospect of further cuts will stimulate the market, helping those looking at houses for sale in Perth.

These institutes are also predicting two cuts this year – one in April and the second in July. The possibility of a second cut is further encouragement for buyers.

If, as expected, APRA place investor lending restrictions in place, this will precipitate a rate cut. Such a cut is intended to reduce the risk attached to loans that borrowers subsequently discover they can’t pay back. With less risk attached, people searching for properties for sale in Perth and elsewhere in Australia can feel more comfortable with their current and future financial position.

So, how are interest rates and the real estate market connected?

Interest rates are one of the most significant factors influencing the health of the real estate market, as the amounts of money involved in even a slight percentage change are vast.

If rates rise, borrowers can’t afford the same loans they might otherwise take out and those with mortgages may find themselves unable to make ends meet and be forced to sell. Conversely, if interest rates fall, loans are easy to acquire and come with little risk attached.

Interest rates in Australia don’t exist in isolation. We are connected to the global economy so the value of various currencies, but particularly the US dollar, effects our own. If our dollar falls, the price of commodities rises, inflation can occur and interest rates may also rise. For now though, it seems the Royal Bank of Australia is set on lowering interest rates, which will help buyers secure loans and property.

This is good news for those looking at homes for sale in Perth and Granger Clark are the best agency to help you reap the benefits of lower interest rates. Whether you are looking at houses for sale in Aveley, real estate in Madeley or elsewhere in Perth, we have extensive listings that might just include your dream home.

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Professionals Real Estate
Cnr Illawarra Cres North & Alexander Drive Ballajura, WA 6066
Phone: 08 9249 6888 Fax: 08 9249 6085 Email: info@grangerclark.com.au