What July’s cash rate means for investors

“This month’s survey shows little change from the previous six — no change coming now and none on the horizon in 2018. Economists’ predictions of when a rise will happen have now been almost fully pushed into 2019,” said Graham Cooke, insights manager at finder.com.au.

“However, no movement doesn’t mean homeowners can rest easy until 2019. In recent weeks we have seen some smaller lenders increase rates out of cycle, and this is a pattern that could spread across the market.

“As lenders are not provided with a reason to increase rates by the RBA, the cost of international lending and interest rate increases in the US have pressured some banks to look at increasing rates anyway.”

With this expected rise according to the panel, Mr Cooke said there is something current mortgage holders can do to get ready for this inevitability.

“What this means for borrowers is that now is the time to review your home loan rate and see if you can find better in the market — preferably a rate with a ‘3’ in front of it,” he said.

“Remember to factor in a buffer of 2 [to] 3 per cent on top of your current rate to allow for future rate hikes — because it’s not a matter of ‘if’ but ‘when’ they arrive.”

First-time investors in Queensland and the Australian Capital Territory could have difficulty entering the market more than in other states, according to renown economists.

From 1 July of this year, the First Home Owner’s Grant in Queensland will be cut by a quarter down to $15,000 and will be removed completely in the Australian Capital Territory, as published previously.

This change is expected to lengthen the amount of time it takes to save for a deposit, with 76 per cent of finder’s panel of experts said it would delay those saving up for a deposit by at least three months and 14 per cent said it would delay savings by at least seven months.

Not all experts believe the First Home Owner’s Grant. For example, Saul Eslake of Corinna Economic Advisory said the “FHOG and stamp duty concessions are a waste of taxpayers’ money, in nearly all circumstances,” and Alex Joiner of IFM Investors, stated the “FHOG grants simply push up house prices, they are [the] government's quick fix for the affordability issue without them being materially effective”.

However, other experts see the usefulness of assistance for first-time buyers, like Leanne Pilkington of Laing+Simmons, who said “stamp duty exemptions, in lieu of the complete abolition of this tax, alleviate some of the pressure would-be first home buyers are undoubtedly experiencing in trying to accumulate a deposit”.

Finder’s Economic Sentiment Tracker saw a decline in positivity about housing affordability by 10 per cent to 12 per cent. This lower sentiment is predicted to stem from buyers who bought at the peak of the market and are now having trouble repaying loans, according to Mr Cooke.

“With the market cooling, those who bought at the peak will be under the most pressure for repayments,” he said.

“Those who bought specifically to rent could be in particular difficulty, as areas that are popular for rentvesters tend to be in the outskirts of the city — which are the first places to drop in value and rental yield in a softening market.”