Given all that has been happening in our world recently, it’s no surprise that interest rates seem to have dropped from the conversation for many homebuyers and homeowners.
However, it has been interesting to see the topic of interest rates gaining some traction in the media in the past week or so, for a couple of key reasons.
One area of interest has been the mention of the possibility of the Reserve Bank resorting to negative interest rates to stimulate the economy. As recently as last week, the chief economist or Westpac, Bill Evans, suggested that the RBA board should consider taking the official cost of money into negative territory.
As bizarre as it sounds, there are several countries around the world that currently have negative interest rates in place, such as Denmark, Switzerland, Sweden, Japan, and the European Union. In Denmark, for example, there are banks which will pay borrowers 0.5% interest to take out a home loan with them.
Whilst most economic commentators are suggesting that this situation is unlikely to occur in Australia, it certainly provides food for thought, doesn’t it?
The other aspect of interest rates that has caught our attention is the talk among some mortgage brokers that we may see home loan rates dropping below 2% in the near future.
A quick scan of some of the online loan sourcing websites this week shows that there are two-year fixed loans being offered at 2.09% and three-year loans at 2.14%, whilst variable loans seem to start at 2.39%
We saw spokespeople from a number of loan brokers being quoted in the media over the weekend indicating that they expect intense competition between lenders to push some rates under 2% to lure customers away from the big banks.
Whether either of the two scenarios mentioned above becomes a reality, it is clear that 2020 has become a great time to negotiate hard on your home loan, whether you are purchasing a property or simply refinancing.
As we always remind our clients, if you are looking for a home loan, we would strongly suggest that you talk to an experienced and independent Mortgage Broker before signing on the dotted line. You might be surprised how much they can save you.
Similarly, if you are planning on making a move, the team at Ian Reid can assist you with specialist Advocates who can make a real difference to your sale or purchase.
Why not give us a call on 9430 0000 today to talk about your options? You’ll also find plenty of helpful suggestions for property sellers in our free booklet, “Fatal Real Estate Traps Exposed”.