In the early 2000s families could assume more leverage to bolster their purchasing power. They may not be able to do this again. However, the signs of housing momentum are building. Australia’s largest mortgage broker processed more home loans last month than in any January previously.
RP Data’s CEO, Graham Mirabito, says that his valuation subsidiary, ValEx, which covers 80 to 90 per cent of all loan transactions,, last week mediated more valuation requests than ever before.
The RBA with its policy settings is certainly doing everything possible to fire up the embers. It says rates are not at “emergency lows” but they sure look like it.
During the GFC, the RBA pushed the average discounted home loan rate down to 5.4 per cent. Discount home loan rates today are only 30 basis points higher at 5.7 per cent.
Fixed-rate home loans are cheaper than ever. The average three-year fixed-rate loan in 2009 was 6.6 per cent. Today it is just 5.5 per cent. On Friday, Westpac announced a two-year fixed-rate product for just 4.99 per cent.
It is hard to imagine how these circumstances will not stimulate hearty asset price inflation."
See AFR: Housing Values Maintain Build-up