Outcomes of the Interest Rate Drop
Another 1% from the RBA – is it going to make any difference?
Spring is typically the time for more properties to be listed.
Is this going to happen this year? It is hard to say. With the turmoil of the current credit squeeze we may have already seen the bulk of listings in the last few months.
Will the extra 1% drop stop people from listing?
Traditionally many people move home in the summer. One reason is that the better weather makes their house present its best. Another reason is that it is the end of the school year and those parents wanting to relocate can do so with little disruption to the childrens’ schooling. Also, the end of the year seems to be a time when people want a change.
So how will this affect the property investor? You may be able to find a property that is more to your liking with more listings to look at. It is a Buyer’s Market at the moment, and with more properties being listed, the sellers are going to have more competition.
Lower interest rates are attractive, but finance is still going to be very hard to get, so if you are going to be seeking finance be all-prepared. Have:
- all your figures for the last 2 years,
- a list of all your assets and liabilities, and
- a projected cash flow for the property you are looking at.
If you are applying for a pre-approved loan, treat it as mentioned, and have a projected cash flow. The more you can show a lender that you know what you are doing, the more chance you have of securing a loan.
In the past if you have gone in with a pre-approved loan you could almost say you had the sale if the seller took your offer. What has changed since the credit crunch is the fact that banks and more so, the mortgage insurers, are changing their criteria on an almost daily basis.
Due to this fact, even if you do go to contract with a pre-approved loan the contract may still fall through.
There has never been a more important time than now, to get in touch with your mortgage broker and learn what is going on.
Set a lengthy finance term in your contract so that you have a chance to approach a second lender should your pre-approved loan fall through.
Keep an eye out, do your figures and see if now is the time for you to invest.
If you’ve had any experiences recently that you would like to share, please add your comment.
Filed Under: Interest Rates • Property Investment
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