Investment and Rate Reviews

I was chatting with clients the other day (let’s call them Jim and Jenny). They bought about 2017 which as it happens was another peak in the property market. But they bought with plenty of equity and have been paying extra on their loan.  This means that despite the rumoured declines in value they have a ton of equity.

This presents two opportunities:

The way some lenders look at rates, the more equity you have in your property the lower the rate. Looking at Macquarie for example (9th August 2022) their variable rate is 3.19% if you borrow less than 60% of the property value increasing to 3.24% under 70% 3.34% under 80% and 3.64% and 4.21% under 95% (click here as rates are going up at the moment and these are all variable and can change without notice)

The most important thing to note is it’s worth reviewing your rate in line with your property value.

Now with this increase in equity in your property, there might be an opportunity to use that equity to buy an investment property.  Let’s face it, we are in an investors market as rates rise and property values.  We have let you know CoreLogic research in the Eastern States in particular has been dropping.  We also have seen the recent rate rises and inflation/cost of living impacting people’s ability or desire to buy. I know a lot of our pre-approved first home buyers have had to reduce the property prices they are looking at. This means more opportunities for investors.

Now we have some clients who are holding out for a further crash in property prices. They might be right but really we only know what is happening today. I don’t have a crystal ball!

What we do know is that residential real estate is a favourite investment of Australians. We like an investment we can touch!

Core logic – in their Monthly Chart Pack (August 2022) tells us;

Sales volumes are starting to ease properties are taking longer to sell and best of all for an investment property purchase, vendor discounting has increased, but the best news of all for property investors is that rents are increasing and overall rents in July are 9.8% higher than the same time last year.

So while we were just getting Jim and Jenny a better rate we have also started the investment conversation…they have already been pre-approved and are looking at a few properties this weekend I will keep you updated.

If rents continue to grow and prices are dropping is this the right time for you to use some of the equity you have been building to get into your first investment property?  Give us a call to chat about what you can do at 0424 191 095.