Local buyers hit brakes amid rate rise concern
PROPERTY markets will cool down until next year, a Torquay broker says, as buyers baulk at looming interest rate rises in coming months.
But most existing home owners are insulated against the expected rate rises and positioned to whether a passing storm before inflation is predicted to taper from next year.
Reserve Bank of Australia (RBA) handed down consecutive rises in June and July to bring the cash rate target to 1.35 per cent.
Economists have predicted a further rise next month following concerning international inflation figures.
Australia’s big four banks are also predicting further rises for the rest of this year.
ANZ issued the most alarming warning last week when it projected the cash rate to reach 3.35 per cent by November.
Torquay-based senior finance broker Daniel Walsh, of UFinancial, said the forecasts had slowed down surging interest in local housing markets.
A double whammy of interest rate rises and pressure on the national building industry has slowed interest in the short term, but Mr Walsh expected a bounceback once conditions normalised.
“There’s a little bit of nervousness or hesitancy around the property market,” he said.
“We’re talking to clients now that are saying ‘Should I buy now, or should I wait?’ Those conversations just weren’t happening six to 12 months ago.
“People want to see how it all pans out, and somewhere around April or May next year, hopefully the rate rises have come to an end or at least stalled, then hopefully that consumer confidence come back again.”
Mr Walsh said the rate rises had so far fallen within expected ranges of mortgage loans issued recently.
“We’re not seeing that obvious mortgage stress just yet.
“It’s a challenging time, but we’ve allowed for those interest rate rises because I think most people knew what was coming.
“The ones that are being proactive about it have been okay.”
Borrowers with fixed rates under previous low interest levels have been hardest hit by the rises, but Mr Walsh said those homeowners had explored refinancing options to get the best possible deal.
The RBA’s next monetary policy meeting is August 2, where it will decide on any change to the cash rate.