There have been lots of changes in the financial industry of late including interest rate drops and changes to loan serviceability. These are all positive things for property investors.

Interest Rate Drop

In its latest meeting, the Reserve Bank dropped interest rates to a record low by cutting the cash rate by 0.25%, bringing it to a record low 1%.

Following last month’s cut, we saw an action-packed few weeks in which 44 lenders dropped variable home loan rates, with 27 doing so by the full 0.25%.

Changes to Loan Serviceability

In response to new guidance from the banking regulator, another one of the big four banks has adjusted its loan serviceability terms.

Australian lenders assess loan serviceability based on whether a prospective borrower would be able to meet repayments up to a certain interest rate, which is higher than what the current market dictates.

Westpac has now moved its current interest rate floor to 5.75 per cent, down from 7.25 per cent. It has also increased its buffer from 2.25 per cent to 2.5 per cent.

This follows moves from ANZ on Friday last week, which was the first of the big four banks to adjust its criteria. ANZ changes its interest rate floor to 5.5 per cent from 7.25 per cent.

These moves from the lenders follow guidelines adjustments from APRA, the banking regulator. APRA previous set interest rate floors, and is now permitting the lenders to self-assess.

These changes to loan serviceability guidelines, combined with APRA lifting its restrictions on interest-only lending earlier this year, should make finance easier to access for Australian investors than it has been in previous years.

Property experts are more confident this financial year of easier access to credit for investors than in the previous two years. Much of this confidence is stemming from guidance handed down by the banking regulator.

Where to Invest?

While currently property values are falling in many parts of Australia, the Brisbane property market seems to be steadily gaining pace and the prime beneficiary of Sydney and Melbourne’s slowdown.

Brisbane house prices are forecast to rise faster than Sydney and Melbourne over the next three years, a BIS Oxford Economics study found.

New figures have revealed Brisbane has recorded its strongest annual rise in rents in three years – slowly placing the power over housing market back to landlords.

After months of flat growth in rental properties, analysis of the latest CoreLogic data by realestate.com.au shows house rents increased 2.4% in 2018, while the cost of leasing a unit became 2.6% more expensive.

Industry experts say the data shows now is the time to buy in the Brisbane market.

Brisbane has escaped much of the recent boom and bust of the southern capitals, looks relatively affordable and with predictions of a 20 per cent jump likely, set for the biggest rise in house prices of any capital city over the next three years. 

Brisbane City is growing faster than projected. New housing supply has dropped, and the market is now heading towards a shortage. Brisbane City’s housing market looks quite solid. It would take a lot of bad economic news to see this market enter a serious downturn.

The real power in Brisbane comes from the opportunity to purchase in one of Australia’s fastest growing economies.

Investors have the opportunity to acquire quality properties positioned ideally for capital growth.

Comparatively, Sydney investors need to spend nearly twice as much to get something equivalent. This is why Brisbane’s new economic environment is likely to attract new buyers into the market through lower entry prices, lesser stamp duty, higher yields and the potential for stronger long-term capital growth in comparison to other markets across Australia.

As a smart investor these are the things you should be looking at.

Simply, now is the time to buy. You can borrow money cheaper than ever before, APRA has lifted restrictions on interest-only lending and house price forecasts are predicting 20 per cent growth in the next few years.

As the state’s economy picks up, potential buyers are able to take advantage of the lower interest rates and improved circumstances.

If you’d like to discuss your individual situation feel free to Leonie directly on 0423 465 038 or at leonie@wealthology.com.au