Talk has already started about possible rate cuts in 2025, but there’s no guarantee this will occur, as the Reserve Bank of Australia is being cautious. In other news:
- Rents hit record-high despite market slowdown
- List of first home buyer grants
- Five signs it’s time to refinance
- Market predicted to favour buyers in 2025
There was conflicting news for property investors and tenants in the latest rental numbers, pointing to a mixed outlook for the rental market.
On the one hand, the national median rent hit a record-high $620 per week at the end of 2024, according to PropTrack. On the other hand, rental growth fell to its lowest level since 2021, after rents increased by just 1.6% in the December quarter.
For tenants, this rental slowdown reduces financial pressure, especially if you’re trying to save a deposit for your first home – although the market still favours landlords.
For investors, please note that while rents are likely to keep increasing, the rate of growth will be much slower than in the past three years. As a result, it’s important to be realistic at your next rental review and to take guidance from your property manager about what tenants in your local market are willing to pay.
Getting on the property ladder is challenging, but it might be easier than you think thanks to a range of first home buyer assistance measures.
The federal government offers the First Home Guarantee and Regional First Home Buyer Guarantee, which help eligible first home buyers purchase a property with just a 5% deposit, without needing to pay lender’s mortgage insurance. Also, at some point this year, Help to Buy is expected to launch – this is a shared-equity scheme that will allow buyers to reduce their cost to as little as 60% of the purchase price, by offering the government a stake of up to 40% in the property.
State governments also offer a range of incentives for eligible first home buyers, including:
- New South Wales – a $10,000 first home buyer grant and stamp duty discounts for purchases up to $1 million
- Victoria – a $10,000 grant and duty discounts for up to $750,000
- Queensland – a $30,000 grant and duty discounts for up to $800,000
- Western Australia – a $10,000 grant and duty discounts for up to $600,000
- South Australia – a $15,000 grant and duty discounts for up to $700,000
- Tasmania – a $10,000 grant and duty discounts for up to $750,000
- ACT – a duty discount for all purchases
- Northern Territory – a $50,000 grant
One of the biggest home loan mistakes you can make is to ‘set and forget’ your mortgage for 30 years, because as the market shifts and your financial situation changes, there’s a good chance your mortgage will no longer be as competitive or suitable.
With that in mind, here are five signs it might be time for you to refinance:
- It’s been at least two years since you took out your loan. Credit policies, interest rates and borrower incentives have changed a lot in that time, so you might find that better loan options are now available.
- Your financial situation is now different. Just as you need new clothes when your body changes, you generally need a new loan when your personal circumstances evolve.
- Your fixed-rate period is coming to an end. Instead of reverting to your lender’s standard variable rate, look around to see if better loan options are available – because the answer will probably be yes.
- You’ve built up equity in your property. If your equity position is stronger, you might now be able to qualify for a loan with a lower interest rate or better features.
- You want to cash out equity. If you want to buy an investment property, you might be able to cash out equity – via a refinance – and use that money to fund the deposit.
Australia’s median property price fell by 0.1% in December, after 22 consecutive months of growth, according to CoreLogic. So while most property markets tended to favour sellers in 2023 and 2024, they’re likely to favour buyers in 2025.
With that in mind – subject to local market conditions – there’s a good chance you can be more calculating in your property search. Reduced buyer competition will give you more time to shop around and conduct due diligence. It will also give you more scope to ask vendors for discounts and more favourable settlement terms.
There are several steps you should take before you start home-hunting. Try to restrict your spending, to make yourself look as creditworthy as possible in the eyes of lenders. Also, order a free copy of your credit report and look for errors: if you find any, apply to have them removed, otherwise they might affect your credit score.
Most importantly, apply for a home loan pre-approval before you attend open homes, so you know what your budget will be. I can help you with that.
