According to ANZ Bank, property prices are expected to rise by 17% in 2021 and mortgage rates are also set to increase much sooner than expected.
The Reserve Bank has clarified that the official cash rate isn’t likely to increase for a few years, but experts believe that fixed mortgage rates have reached their lowest point. In fact, more than 30% of new loans acquired recently have been at fixed rates, with 2-3 year fixed term interest rates available below 2%.
However, in the second half of the year, these loans are unlikely to stick around – cheaper government funding will dwindle over time, which will also impact the variable interest rates too. Many economists also believe that the 30-year longevity of falling interest rates in the Australian property market has now gradually come to a halt, with longer dated fixed rates (more than 4 years) beginning to rise.
On this note, ANZ economists are tipping property prices to increase sharply across the capital cities in 2021. In particular, Sydney and Perth are expected to perform best with 19% growth, followed by Hobart (18%), Melbourne and Brisbane (16%), and Adelaide (13%).
These estimates are rather optimistic in comparison to Commonwealth Bank and Westpac, whose economists predicted price increases of 8% and 10% respectively in February. Experts state that low housing supply, in combination with FOMO (fear of missing out), are helping to drive up the market prices. There has been stimulated demand from property buyers, who are taking advantage of historically low interest rates (especially fixed rates), along with various government support programs.
Looking to Buy a House During COVID-19?
If you’re searching for a home loan during the pandemic, we can help you achieve your property goals quicker. You’ll get a seamless, obligation-free service from those who will work closely with you to research and negotiate a loan to suit your lifestyle and financial circumstance. Contact us now!
