Roller coasters can be enjoyable

Ever been on a Roller Coaster?

You know the feeling as you slowly make it to the top, the sense of anticipation, then the excitement of the rush as you shoot down the other side?

That’s pretty-much where the property market is right now – we are at, or are close to, the top of the interest cycle.

And some economists are talking about rate cuts next year – cuts which normally drive the property market crazy.

Increasingly, the Reserve Bank (RBA) is implying it is done with interest rate rises (though it’s not a done deal).  The 12 rate rises we have experienced increasingly appear to be doing their job, with Aussies spending less, the property market calming down and the jobs market turning.

In fact, some economists have said that, all these rises will deflate the economy so much that the Reserve Bank will soon be forced to drop rates.

The current cash rate of 4.1 per cent is way above the RBA’s inflation target of 2-3 per cent.

CBA has predicted the RBA would cut rates by a full percentage point next year; with a further two cuts in the first half of 2025.

And Betashares’ Chief Economist, David Bassanese, has predicted rate cuts will start as soon as April.

A percentage point reduction in the cash rate would save a household with a $600,000 mortgage about $400 in monthly repayments.

Rate cuts are normally the starting gun for a spike in the property market – when mortgages become more affordable and people are more prepared to buy, prices typically shoot up.

Many of my astute clients are now looking to buy before prices go crazy.

This change wont be this week.  In fact, its unlikely to be this year.  But, sooner-or-later, there will be a lift-off in the property market.

Graeme Salt is an award-winning mortgage broker.  If you wish to discuss your property loan needs, please contact him on 02 9922 5055