Auxo Finance

22/10/2023

When are interest rates expected to drop?

From May 2022, the Reserve Bank of Australia (RBA) began one of the most aggressive monetary tightening periods in Australian history as it tried to curb soaring inflation.
But with several months of cash rate pauses by the RBA, many believe the tide may have turned.

So, now the question on everyone’s lips is: when will interest rates come down in Australia?

While there’s no crystal ball to predict exactly what the RBA will do next year, there is growing speculation that interest rates will come down in 2024. Let’s see what the experts are predicting.

What the Big Four banks are saying
Commonwealth Bank expects there to be four cash rate reductions, kicking off from March 2024 and finishing with a cash rate of 3.10% by the end of next year.
Westpac is banking on a more gradual decline, starting with a cash rate drop in September 2024 and another one in December to 3.60%.

NAB is anticipating a cash rate cut in August 2024. It anticipates the cash rate will return to around 3% by early 2025.
ANZ foresees the RBA pausing the cash rate for an extended period, before easing it towards the end of 2024.

It’s important to remember that the predictions above are not a guarantee. Unforeseen events like changes in global economic conditions or domestic policies can impact cash rate decisions.

What about inflation?
The RBA has been trying to get inflation back within the target range of 2-3%. In recent months, we’ve seen inflation coming down, so it appears things are on track.

According to the RBA, headline inflation is expected to decline to 4.5% by the end of 2023 and to reach 3% by mid-2025.

What you can do as a borrower
Stay informed

Make sure you keep across the news so that you are up to date with the RBA’s cash rate decisions.

Next year the RBA is changing things up, following recommendations from the review of the central bank. There will be eight cash rate decisions instead of 11. Four of the meetings will be on the first Tuesday of February, May, August and November. The other four meetings will be held midway between these meetings (dates to be confirmed).

Regularly review your home loan

With interest rates potentially on the move, it’s important to review your home loan. It’s especially true if you haven’t had it checked in the last two years.

Ask us for a home loan health check and we’ll explain how your current loan measures up in today’s mortgage environment, along with if refinancing could be right for you.

Like to talk through your options?
Maybe you’re thinking about buying a property once interest rates come down. Talk to us about how a drop in interest rates could affect your borrowing capacity and what you can do now to prepare for a property purchase in the near future.

15/05/2023

The Treasurer announced the 2023-24 Federal Budget which included a range of measures to help tackle the cost of living and improve housing affordability.

Whether you’re just starting your home buying journey, are looking to upgrade your home, or build a new one, these measures could support you:

The Home Guarantee Scheme criteria will be expanded to enable more people to qualify. Permanent residents, non-couple joint applications, previous home owners and more single guardians will be able to access some of the home guarantee schemes on offer from the new financial year.

A Household Energy Upgrades Fund to support home upgrades that improve energy performance and save energy. This includes $1.0 billion in funding to the to provide 110,000 low-cost finance and mortgages in partnership with private lenders for home upgrades that save energy.

For eligible new build-to-rent projects where construction commences after 9 May 2023, the government will increase the rate for the capital works tax deduction (depreciation) to 4 per cent per year and reduce the final withholding tax rate on eligible fund payments from managed investment trust (MIT) investments from 30 per cent to 15 per cent.

You can read more about these initiatives, as well as some other measures aimed at home buyers and owners here.

https://budget.gov.au/content/01-col-relief.htm

To understand your options when it comes to purchasing, constructing or refinancing property, contact us on
1300 558 130.

Australian Federal Budget, 2023-24

01/05/2023

CoreLogic Home Value Index: Further evidence Australia’s housing downturn is over

Australian housing values look to have bottomed out, after a second consecutive monthly rise was recorded in April. CoreLogic’s national Home Value Index (HVI) increased by 0.5% last month, following March’s 0.6% lift.

Sydney is leading the upswing, however the four largest capital cities have all recorded a rise in home values over the past three months.

CoreLogic’s research director, Tim Lawless, said it is becoming increasingly clear the housing market has moved through an inflection point.

“Not only are we seeing housing values stabilising or rising across most areas of the country, a number of other indicators are confirming the positive shift. Auction clearance rates are holding slightly above the long run average, sentiment has lifted and home sales volumes are trending around the previous five-year average,” he said.

Find out what’s happening in your closest city or regional area.

ps://www.corelogic.com.au/news-research/news/2023/corelogic-home-value-index-further-evidence-australias-housing-downturn-is-over?utm_medium=email&utm_source=newsletter&utm_campaign=au-res-hvi-2023-may

After falling -9.1% between May 2022 and February 2023, Australian housing values look to have bottomed out, posting a second consecutive monthly rise. CoreLogic’s national Home Value Index (HVI) increased by half a percent in April, following a 0.6% lift in March to be 1.0% higher over the past t...

25/04/2023

Lest We Forget

20/04/2023

We hope you had a wonderful Easter and enjoyed a treat or three with your loved ones.

Homeowners breathed a collective sigh of relief this month when the Reserve Bank of Australia (RBA) kept the cash rate on hold, following the release of softer inflation figures.

Meanwhile, it’s been a slower than usual start to the autumn property season, with many buyers and sellers still adopting a “wait and see” attitude.

Seasonal new listings have been down compared to previous years, as sellers hesitate given the current climate.

CoreLogic recently revealed house prices across the nation had plummeted 7.9 per cent over the year to February – the largest 12-month decline on record. For prospective buyers who are in a position to snap up a bargain, there are certainly opportunities to be found.

Interest rate news
At its April meeting, the RBA kept the cash rate on hold at 3.60 per cent. It follows 10 consecutive cash rate increases by the RBA, starting in May 2022.

Following the release of the latest inflation figures from the Australian Bureau of Statistics (ABS), there were hopes that a cash rate pause could be on the horizon.

The ABS’s monthly consumer price index showed annual inflation of 6.8 per cent over the year to February – down from 7.4 per cent in January and a peak of 8.4 per cent in December.

The recent collapse of a major US bank, Californian-based Silicon Valley Bank, also added fuel to the argument that the RBA’s run of rate rises could be nearing an end.

Never before has it been so important to shop around for a home loan and compare products.

We’re here to help, so get in touch for a comprehensive home loan health check.

Home value movements
In March, we saw house prices rise nationally for the first time in 11 months, according to CoreLogic. Home values were up 0.6% in the month of March.

The growth was led by Sydney and Melbourne, which experienced increases of 1.4% and 0.6% respectively.

Meanwhile, some of the smaller markets, such as Darwin and Hobart, are still seeing properties prices fall.

We are seeing divergence in some cities as well, with certain suburbs faring better than others.

In some areas of Sydney, for example, the shortage of housing stock caused by vendors’ reluctance to sell has increased competition for properties and pressured buyers to pay more. As a result, record prices were being fetched for properties in at least 20 suburbs in February and March.

CoreLogic’s research director, Tim Lawless, said several factors were helping to drive up property prices, including below-average stock levels.

“Although interest rates are high and there is an expectation the economy will slow through the year, it’s clear other factors are now placing upwards pressure on home prices,” Mr Lawless said.

“Advertised supply has been below average since September last year, with capital city listing numbers ending March almost -20% below the previous five-year average.

“Purchasing activity has also fallen but not as much as available supply; capital city sales activity was estimated to be roughly -7% below the previous five-year average through the March quarter.”

Meanwhile, recently we saw the combined capital cities record the highest preliminary clearance rate since mid-April 2022. Auction volumes dropped over the Easter long weekend, as expected.

Ready for a fresh start in a new home? Looking to purchase an investment property or to refinance? We can find the right home loan for your specific needs.

Unlike going direct to a lender, we will get to know your unique financial circumstances and compare a range of mortgages to find one that marries with your goals.

To discuss your finance options, get in touch today.

Call us on 1300 558 130

04/04/2023

Despite the interest rate increases, there’s still strong competition amongst lenders for your business.

If you’ve been with the same lender for a while, now is a good time to review your mortgage and make sure it’s still right for you.

Refinancing may help you to:

Secure a lower interest rate

Pay less fees

Free up equity for an investment property or another asset

Consolidate your debt

Add interest-saving features to your mortgage (an offset account or redraw facility, for example).

We can run through your finances and take a good look at your mortgage to see whether it still works for you. If you could be getting a more suitable home loan elsewhere, we’ll let you know.

To explore your options, get in touch today on 1300 558 130

23/03/2023

4 Reasons to consider investing in property now

Have you been patiently waiting in the wings, wondering whether or not to buy your first investment property in 2023?
You’re not alone. Many buyers have been spooked, what with all the changes in the market.

Whether or not now is the right time to buy really depends on your financial situation and goals, but there are certainly some compelling reasons to at least consider it.

The drop in housing prices may be stabilising
As a first-time investor, it may be a good time to take advantage of lower property prices.

Property values have been falling for several months following consecutive cash rate increases by the Reserve Bank of Australia (RBA). But recently there have been signs the decline in property prices could be easing.

According to CoreLogic, the national decline was only -0.14% in February – the smallest monthly fall since May last year.

CoreLogic’s research director, Tim Lawless, said the stabilisation in housing values over the month coincided with consistently low advertised supply levels and a rise in auction clearance rates.

“This trend towards a below average flow of new listings has been evident since September last year, coinciding with a loss of momentum in the rate of value decline.”

Rents are on the rise
Migration has returned with a bang. Demand for rental properties is outstripping supply in many markets and rents are going through the roof.

Last year we saw rents surge to a record high of 10.2%, reaching a median of $555 per week.

Meanwhile, rental vacancy rates hit record lows in February. Nationally, just 0.8 per cent of rental properties were vacant.

If you’re in a position to invest, you may be able to take advantage of the current conditions and find a property with an attractive rental yield. Imagine what you could do with that extra cash flow.

We may be over the worst of the cash rate hikes
While nobody has a crystal ball when it comes to monetary policy, some experts believe that the majority of cash rate hikes may be behind us.

RBA Governor Philip Lowe did indicate recently that the board was considering a pause after 10 consecutive interest rate rises, but the timing would depend on incoming economic data.

“We also discussed that, with monetary policy now in restrictive territory, we are closer to the point where it will be appropriate to pause interest rate increases to allow more time to assess the state of the economy,” he said.

“At what point it will be appropriate to pause will be determined by the data and our assessment of the outlook.”

Potentially less competition
With all the uncertainty about where interest rates and property prices will go, many buyers are waiting and watching.

In January 2023 in seasonally adjusted terms, the value of new loan commitments for total housing fell 5.3% to $22.1 billion, after a fall of 4.3% in December. It was 35% lower compared to a year ago.

For owner-occupier housing, it fell 4.9% to $14.7 billion, which was 35.1% lower compared to a year ago. Meanwhile, for investor housing, it dropped 6% to $7.4 billion and was 34.8% lower compared to a year ago.

The reduced appetite for finance indicates there’s less buyer competition, so you may have a better chance of scoring the property you want.

Ready to get started?
Whether or not you should invest in property at the moment comes down to your individual situation, but one thing’s for sure – all the right essentials are in place for opportunistic property investors.

If you do decide it’s right for you, talk to us about your finance options. We’ll explain your borrowing capacity and line you up with the appropriate investment loan to suit your needs.

Get in touch today.

20/06/2022

Due to a trademark being taken out on the word Cerberus, we have been forced to change our name, despite the office being 250 metres away from the Cerberus ship wreck in Half Moon Bay.

We are now Auxo Finance. We chose AUXO because it means Growth in Greek mythology.

Nothing else changes, and we will continue to offer finance broking services for Residential, Commercial and Asset Finance. We continue to remain passionate in everything we do, particularly in the Self-employed/Business Owner and Investor space.

06/06/2022

House prices forecast to tumble

As more rate hikes loom, house prices are expected to drop another 15% over the next 18 months

As more rate hikes loom, house prices are expected to drop another 15% over the next 18 months The housing market is expected to tumble sharply next year as looming interest rate hikes cast a shadow. Experts predict a 15% drop in house prices over the next 18 months, after prices dropped last month for the first time in nearly two years, according to a report by The Australian.

The national house price average fell by 0.11% last month, driven by drops of 0.29% in Sydney and 0.27% in Melbourne. While May was the fourth consecutive month in which Sydney posted falling prices, it was the first month in which the national average fell, The Australian reported.

Shane Oliver, chief economist at AMP, told the publication that people being priced out of the market was a significant driver of the fall, with prices having skyrocketed an unsustainable 20% since the onset of the COVID-19 pandemic while wage growth stayed flat at around 2.3%. AMP also said the drop was spurred by high inflation, rising mortgage rates, changing consumer spending, a fall in consumer confidence and the beginning of monetary tightening by the RBA.

“The deterioration in affordability has priced many out of the market,” Oliver told The Australian. “But the main driver of the downturn is the upswing in interest rates. ”Analysts at Morgan Stanley said last month’s cash rate hike has already impacted the market. “It is no coincidence that the first month of declining national prices coincided with the first rate hike since 2010,” Morgan Stanley said. “While sentiment has already been deteriorating for several months, rate hikes have a much more direct effect on actual and expected serviceability costs, as well as credit availability.”

Morgan Stanley said it expected the RBA to hike rates at most meetings this year, raising the cash rate to 1.75% by December.
“The tightening impact of this on housing means we continue to see national prices declining 5% this year and 10% next year, for one of the largest nominal declines on record,” Morgan Stanley said.

Oliver told The Australian that house prices have likely peaked. “We continue to expect a peak-to-trough fall of around 10% to 15%,” he said.
However, AMP’s forecasts for the rest of 2022 aren’t quite as dire as Morgan Stanley’s. “After 22% growth in national average home prices last year, home prices this year are now expected to fall 2%,” AMP said. Oliver said that it was unlikely that the drop in prices would severely impact the market or the wider economy.

“Seen in the context of the huge 29%-plus surge in prices since their 2020 low, this will just take average prices back to the levels around March last year, so a big rise in negative equity is unlikely,” he told The Australian. However, Oliver warned that homeowners might be less prepared for rising rates than in previous cycles. “Household debt-to-income and house-price-to-income ratios are way higher than they were when the last rate hiking cycle started in 2009,” he said.

08/05/2022