How do Australia’s lowest mortgage rates affect you?

Since the news broke out, Commonwealth bank (CBA) was the first to announce arate cuts for their customers by introducing a four-year fixed rate of 1.99 percent – its lowest rate in history as advertised by CBA. 

CBA may have made the first move, but the rest of the major banks followed suit with Westpac matching CBA with a four year fixed rate rate of 1.99 percent and NAB offering a four year fixed rate of 1.98 percent.

Let’s say you take out a home loan of $600,000. With an interest rate of 1.99 percent, monthly repayments equate to $2,215 per month, $511 per week. 

To illustrate, a common standard variable rate of 3.85%, with the same loan of $600,000, would cost around $2,813 or $649 a week.

For the Federal Government, lower rates strongly supports Australia’s economic fundamentals, especially during recovery periods as one we’re experiencing now through COVID-19. In conjunction, the Federal Government is also proposing to roll back the Responsible Lending Regulations enacted by the Rudd Government in 2009. If approved, these changes to lending regulations would simplify consumer borrowing, further boosting consumer confidence and growth in the property market. 

Westpac’s latest November data revealed that consumer confidence in Australia has continually risen since August. Even with Melbourne previously in lockdown, Melbourne’s consumer confidence saw a 9 percent jump in November.

In the same study, the “time to buy a dwelling” index also rose from 122.2 to 132 in November. The jump is significant as it brings the index 11% higher compared to November 2019 where COVID-19 was yet to happen. The current index level has also reached the highest level since November 2013! 

These spikes in consumer confidence and ‘time to buy’ indicess shows Australians are feeling more confident  to buy property even during recovery periods like the one we’re currently experiencing. 

“As Australia continues to be at the forefront of the world’s COVID-19 economic recovery efforts, Australian property owners and investors should find the many Government measures to support the economy and property markets to be highly reassuring, said Ironfish Head of Property, William Mitchell.  

To learn about how these new rates affect you and your personal situation, speak with one of our experienced property strategists.