Property prices are cooling. Here's why that might actually help your mortgage
Written by Michael Lawes
Property values have started to soften after a long run of headlines about rising prices, and if you own a home, that probably doesn't feel like great news at first glance. But there's a genuine silver lining here, and it has more to do with your mortgage than your home's price tag.
Does a cooling property market actually affect my home loan rate?
Yes, indirectly. Housing is one of the biggest inputs into the Consumer Price Index, and when property prices ease, people tend to spend more cautiously, which helps bring inflation down. Lower inflation is exactly what the RBA needs to see before it eases off on rates, so a softer market can work in home owners' favour over time.
To be clear, "housing" in the CPI isn't about resale prices directly. It's the flow-on effect that matters. When prices are running hot, people feel wealthier and spend more on renovations, furniture and tradespeople. When prices cool, that spending eases too, and RBA assistant governor Christopher Kent recently pointed to softer property conditions as a factor reducing the case for further rate hikes.
When will interest rates actually come down?
Nobody has a reliable date, and be wary of anyone who tells you otherwise. RBA governor Michele Bullock has said further hikes can't be ruled out if inflation stays sticky, while most of the big banks are now forecasting the next move to be down, not up.
The catch is timing. Even the banks' own forecasts don't expect the cash rate to fall before 2027, and the RBA isn't expecting inflation back in its 2 to 3% target range until around the middle of that year. If you're waiting on the RBA to hand you relief, you could be waiting a while.
Do I have to wait for the RBA to get a better rate?
No, and this is the part worth acting on now. Nearly 50 lenders currently offer variable rates below 6%, according to Canstar, while plenty of home owners on older loans are still sitting well above that. If you haven't reviewed your loan in a few years, there's a decent chance you're one of them.
I had a couple come through recently who fit this exactly, a Bayside family who'd upgraded into a bigger place a few years back, locked in a rate that felt competitive at the time, and never looked at it again. Once we ran the numbers, the gap between what they were paying and what was actually available had grown enough to make refinancing an easy decision, not a complicated one.
That's the thing about rate reviews. You don't need to predict where the RBA is heading. You just need to know whether your current rate still stacks up against what's on offer today.
If it's been a while since you've had your loan looked at, it's worth ten minutes to find out where you stand. No pressure, no obligation, just a clear picture of whether you're paying more than you need to. Contact us today.
Credit Representative 550477 is authorised under Australian Credit Licence 389328.
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