Fixed rates set to rise further as economic confidence returns
The low interest rate environment will continue into 2014. However, fixed rates will edge higher as economic confidence improves in Australia and overseas, according to Aussie’s executive chairman, John Symond.
Mr Symond advised property buyers seeking certainty around their mortgage repayments that now may be a good time to fix rates before they climb higher in the New Year.
Despite recent property price rises, Mr Symond said low interest rates and growth in wages should continue to drive affordability – allowing housing to remain at its most affordable level in a decade.
“2014 will have its challenges for consumers and businesses, but I believe better times are ahead as economic confidence improves in both Australia and overseas,” he said.
First home buyers, however, may continue to struggle, according to Mr Symond.
“The current historic lows in interest rates have not attracted first home buyers, who now make up only about 13 per cent of all loans written, with investors expected to continue to dominate property purchases,” he said.
“This is a long-term fundamental shift in the property market, where in many areas first home buyers have simply given up on what has been a long-held tradition in Australia – getting started with a small house or an apartment in the suburbs.”
Mr Symond said first home buyers could no longer compete against investors in many hot property pockets of most capital cities, preferring to invest in shares and rent in apartments nearer their workplaces or CBDs.