How high will interest rates rise in 2023?

Experts are warning Australians to brace for more interest rate pain in the year ahead.

After the Reserve Bank of Australia (RBA) increased the cash rate to 2.85 per cent in its Melbourne Cup Day meeting, the major banks have adjusted their forecasts for when interest rates will peak.

Here’s what they are saying:

What the Big Four banks are saying

Westpac predicts rates could go as high as 3.85 per cent by March 2023, while ANZ forecasts the cash rate will take a little longer to peak at that level in May.

NAB’s forecast is a little more conservative. It expects the interest rate to hit 3.6 per cent by March 2023, which would push the average variable rate to 6.48 per cent.

For an average $1 million home loan, that equates to an extra $2,100 a month compared to earlier this year when the official cash rate was at a historic low of 0.1 per cent.

CBA expects interest rates to hit 3.10 per cent by the end of the year and remain steady for the first half of 2023.

This follows seven consecutive months of interest rate rises aimed at curbing soaring inflation, which currently sits at 7.3 per cent – Australia’s highest inflation rate since 1990.

How to navigate a higher rates environment

Larger home repayments coupled with higher living costs means many borrowers will be looking for ways to save money.

While refinancing to secure a more competitive rate might seem like an obvious step to take, borrowers shouldn’t rush into making this decision.

That’s because there’s a lot to consider. Does a loan with a lower rate provide the same features? Will the new loan suit the borrower’s needs over the long term? For example, can the borrower access equity from their property if they wish to renovate down the track?

With so much at stake, leaning on a professional to help guide you through the process can really pay off. Speaking with a broker about which loans will suit your needs could not only lead to a good financial outcome but can also provide valuable peace of mind.

In the same way, brokers can help new home buyers—to understand loan features, lending terms and navigate the special loan rates flooding the market—helping to make their home lending journey smoother.

We’re here to help

Contact us today to discuss refinancing or lending options for a new home.

Planning a 2023 tree change or sea change?

In recent years, many people have moved out of cities to regional areas looking for a quieter and more relaxing lifestyle.

Many thought this trend would end now that COVID lockdowns appear a thing of the past, but a new report by buyers’ agency, Hotspotting says otherwise.

Australia’s regional exodus

According to buyers’ agency Hotspotting, the migration of city dwellers to the regions has been building for the past 5–6 years, so it’s incorrect to say it’s a trend driven by the pandemic.

It’s more about technology enabling people to work remotely and having access to a better lifestyle at an affordable price. And, according to Hotspotting’s Terry Ryder, “It’s a long-term trend and it’s here to stay.”

Impact of the pandemic

What the pandemic did was supercharge an existing trend. The Regional Australia Institute’s (RAI) Regional Movers Index report found migration from capital cities to regional Australia increased by 16.6 per cent during the 2021/22 financial year when lockdowns occurred.

During this period, it seems that some people left metropolitan areas for a variety of reasons including to retire, downsize, find more affordable housing or for lifestyle reasons such as a slower pace of life.

Regional centres like Geelong, Ballarat, Newcastle, the Central Coast and Sunshine Coast have all boomed on the back of this demographic shift.

Ryder says people will continue to seek out a tree change or sea change in regional locations that offer cheaper prices, an attractive lifestyle, higher rental yields and good potential for price growth.

This year’s regional hotspots

The report identifies the top 10 regional areas tipped for major growth:

  • Onkaparinga, SA
  • Mandurah, WA
  • Toowoomba, Qld
  • Port Stephens, NSW
  • Mitchell Shire, VIC
  • Townsville, Qld
  • Geraldton, WA
  • Yeppoon, Qld
  • Murray Bridge, SA
  • Bundaberg, Qld

Some of the drawcards enticing city dwellers to regional towns include affordable property prices as well as good transport infrastructure. Take Toowoomba for example, the $1.6 billion Toowoomba Second Range Crossing and $15 billion Inland Rail Link, along with affordable housing (in the vicinity of $385,000) is luring residents from their city abodes.

Ready for a fresh start in a new location?

We can arrange the right home loan to suit your specific needs. Get in touch today.

Is rentvesting right for you?

The Great Australian Dream of home ownership is still alive, but it’s evolving.

With rising costs of living and higher interest rates, rentvesting has become an increasingly popular strategy for getting a leg up on the property ladder.

Reinvesting is when you rent where you want to live and buy where you can afford.

Here are some things you should consider before deciding whether rentvesting is right for you.

The pros of rentvesting

Rentvesting can offer both flexibility and financial security. Here are some of the advantages of rentvesting:

  • A leg up on the property ladder: Rentvesting allows you to get started in the property market with a smaller deposit and work towards buying the home you want.
  • Lifestyle perks: Want to live in a trendy neighbourhood that’s out of your price range? With rentvesting, you could live the lifestyle you want and invest elsewhere.
  • Flexibility: Renting gives you increased flexibility to move around if your circumstances change.
  • Tax benefits: What can be great about owning an investment property are the tax perks. Many of the property expenses can be offset against your income.

The cons of rentvesting

Rentvesting isn’t necessarily a good option for everyone. Here are some of the disadvantages:

  • No First Home Owners’ Grant (FHOG): If you decide to buy an investment property rather than a home, you won’t be entitled to either the FHOG or stamp duty exemptions or concessions for that property. These are for first time owner-occupiers.
  • Added responsibility: Being a renter and a landlord at the same time means you’ll have multiple expenses to cover. In addition to paying your rent, you’ll have costs including council rates, property management fees, maintenance, landlord insurance, as well as your mortgage repayments.
  • You won’t own your home: Renting means you don’t have control over how long you can stay in your property which means you may end up moving on a regular basis.
  • Capital Gains Tax: If your investment goes up in value, you may be subject to Capital Gains Tax when you decide to sell.

Where to buy?

New analysis from Property Investment Professionals of Australia (PIPA) has identified the top five areas to rentvest in 2022:

  1. Casey City Council (Melbourne)
  2. Moreton Bay Regional Council (Brisbane)
  3. City of Onkaparinga (Adelaide)
  4. City of Sterling (Perth)
  5. Penrith City Council (Sydney)

But with any property search, it’s important to do your research on things like capital growth potential and rental yield.

Like to know more?

If you think rentvesting could be right for you, speak to us and we’ll help you to explore the finance options to suit your needs.

What you need to know come settlement day

The search for your dream property can be both exciting and stressful. From the inspections that kick everything off to putting in your offer and having it accepted, these are all stepping stones on the journey towards ownership.

It all culminates in the final step of the process – settlement day. Here’s what to expect and some tips to prepare for a successful property settlement.

What is settlement day?

Settlement day is the day ownership of a property is legally transferred from one party to another. Simply put, it’s the day you get the keys to your new home.

Your conveyancer will take care of the finer details and works with us for the finance. Meanwhile, you must also follow all sorts of regulations and procedures that they will explain to you, including those required by the lender and building insurance provider.

The date of settlement will be outlined in the sales contract. Your broker will work with the conveyancer in consultation with you to confirm the timing and review the contract before signing it.

What should I do before settlement?

There are several things you need to do ahead of the big day to avoid any last-minute surprises.

Firstly, it’s important to do a final inspection of the property to ensure you didn’t miss anything. Secondly, make sure you’ve organised building insurance, which should be done as soon as the seller signs the contract. Finally, check in with your conveyancer to ensure you’ve completed and submitted all of the necessary documentation to transfer the property into your name.

What happens on settlement day?

Your lender and conveyancer will take care of the final paperwork and financial transactions. They’ll work with the seller’s representatives to ensure the balance of the purchase price, along with any government fees and duties, is settled.

They will also check all necessary legal documents are completed and lodged with the respective agencies. And they will arrange the transfer of the certificate of title to your name and ensure the property is legally transferred to you.

Once the paperwork is completed successfully, the settlement is final. Congratulations! You are officially the new owner.

What can I do to ensure a smooth settlement?

To ensure a smooth settlement day, it’s worth seeking advice from professionals who understand the process.

As a mortgage broker, we can assist with organising pre-approval for a home loan and we’ll be there with you every step of the way.

Finding a reputable conveyancer who specialises in property law will ensure you understand your responsibilities and rights in terms of the settlement process. They will oversee the legal requirements and paperwork and, most importantly, ensure the title is correctly transferred, or conveyed, from the seller to you.

Finally, make sure you have a suitable settlement period in mind. We can discuss this with you, as settlement periods can range anywhere from 30 to 90 days. You may be able to negotiate with the seller before signing the contract to secure a date that works for you.

Ready to get started?

We’re here to support you through settlement and beyond. Get in touch today.