The rapid surge in housing prices throughout 2021 hasn’t affected RBA’s stand on the cash rates.
The bank held the cash rates at 0.1 per cent in June and is adamant that it will keep the cash rates low until at least 2023.
This has helped in creating a property boom in Australia. Housing prices across Australia have risen by more than 2 per cent in May alone, and 10 per cent since the pandemic hit.
Sydney, unsurprisingly, has been in the front seat of the property boom, growing 3% yet again last month. On the other hand, Hobart surprisingly had the highest property growth rate at 3.2% over May.
The median prices of dwellings across Australia grew again this month, making it increasingly difficult for homebuyers to get into the property market.
The new APRA data shows that the growth rate for owner-occupier home loans has been slowing down from previous months. The total increase in owner-occupier loans was $6.9 billion in May, compared with an increase of $8.3 billion in March.
The growth rate in investment lending, however, has increased from previous months. The total investor loans increased from $160 billion to $160.8 billion in April. This was an increase from March’s growth rate of 0.2 per cent to 0.3 per cent in April.
Some experts think that with the investors increasingly in the market and owner-occupiers slowing down, the RBA may change its stand on the cash rates sooner than expected.
We have already seen the major banks starting to increase their interest rates, and it is possible that the RBA will follow.
Is buying now good then?
We understand that trying to get into a red hot property market that increases in prices daily could be stressful for homebuyers.
However, this may be the best time to understand how much you can borrow and buy a property according to your capacity before the rates and prices eventually go up again.
Get in touch with the team at Cornerstone Home Loans if you want to explore your options.