The quick takeaway from the RBA’s March rate
- As expected, RBA keeps rates at 0.10%
- Real estate is on fire: property prices rose 2.1% and is the highest monthly increase in 17 years
- We are in a real estate bubble
- March 31 is a date to watch when JobKeeper and JobSeeker come to an end
- A perfect storm is brewing
- The government is pushing for lending laws to be relaxed
- Banks are buying assets like crazy and not disclosing where we’re at with mortgage defers
- Interest rates are low
- Buyer absorption rate is high
- Keys are exchanging hands
- Make the most of your opportunities now.
- Now is good. The future – who knows. Take advantage of the now more than ever.
The insights into RBA’s March rate
The RBA’s interest rates for March remain on hold at 0.10 %. And while this small figure looks lovely, a perfect storm is brewing.
The housing market remains on fire with the new lifestyle staycation still appealing as ever: home values rose 2.1% during February.
As the highest monthly increase in 17 years, there is genuine concern the market will overheat spectacularly. Nationally, there has been a 20% increase on average in prices but only a 3-5% gain on average in the last quarter with home loans increasing 10.5% over January to $29B.
In 1 year housing prices rose 20%
3 months ago, the price increased 3%
The real estate market has to start levelling out soon
We are now definitely in a real estate bubble – where many of us appear to be living or are forced to live to repay in the future.
It has been a strong start to the year and is still a strong market, but all it needs is some bad news for bitcoin, stock and property to plummet. I am forecasting March 31 will be a date to watch.
While the RBA says it won’t increase interest rates until inflation reaches 2-3% – a figure they say is unlikely to hit until 2024 – the housing price surge and economic recovery may force those interest rates to rise much sooner. While the economy continues very well, inflation and employment figures are still keeping the RBA on a tight balancing rope.
Indeed, all the elements for a perfect storm is brewing.
The government is proposing loosening responsible lending laws to boost recovery and encourage lenders to relax home loans for borrowers – a law introduced after GFC to avoid the global catastrophe that hit everywhere else (particularly the USA and Iceland) but Australia thanks to our stringent banking laws. Household debt is already disturbingly high, so relaxing these banking laws could trigger quite the bomb – especially with our mortgages.
Despite few foreign investments and purchasing, there’s still an oversupply of buyers nationally, thanks to low interest rates and banks offering loans to more people with smaller deposits. This can only tighten up household cashflow for the future.
However, while foreign investment is on the short supply, there is every indication a great deal of foreign interest has all eyes on our market with Australia standing as one of the few global strong economies – and let’s not forget the great lifestyle that comes from living down under either. Once borders reopen, this might be a saving grace for our lucky country.
Houses are performing better than units, and rural areas are performing much better than cities though prices are still strong and strengthening.
As JobKeeper and JobSeeker reach an end March 31, mortgages deferments are still be on holiday – another pressure cooker level up for the future.
While banks are quietly mentioning their arrears are down, they are not disclosing how high their mortgage deferrals are. Just one more click of the button for a huge pop of the bubble in times to come.
Interest rates are low.
Buyer absorption rate is high.
Keys are exchanging hands.
|Make the most of your opportunities now.
Now is good. The future – who knows. Take advantage of the now more than ever.
Watch Corelogic’s latest insights into the property market
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