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Property market update – January 2022

JANUARY UPDATE: CASH RATE | 0.1%

2022 auction market ramps up early 

As auction markets start strong for the year, CoreLogic Australia has begun reporting a week earlier than usual. 448 auctions were held across combined capital cities over the past week (ending 23rd Jan), this is 84% more than the same time last year. Adelaide saw the highest preliminary clearance rate at 78%, followed by Canberra and Brisbane sitting just over 76%, Melbourne at 64%, Sydney (58.3%) and Perth (50%) coming in last.

Although auction numbers are higher than usual in comparison, clearance rates are now lower than the over 80% we have been experiencing for the previous 3 months. Keeping in mind our volumes are still lower than we will see for the rest of the year, it will be interesting to watch the trends as the sample of auctions climbs to 1,000+.

First fixed rate move of 2022 

Westpac is the first of the big four to make a move in their fixed rates for the year, adding 20 points to their longest-term 5-year rate, and 15 points to mid-term rates. Currently, the Westpac rates sit at:
– 5yr fixed rate at 3.59%
– 4yr fixed rate at 3.34%
– 3yr fixed rate at 3.04%
For borrowers, this means at least a $40 increase a month.With inflation in the US reaching its fastest pace in nearly 40 years, the cost of fixed-term funding is rising.Borrowers who were able to lock in a record-low fixed rate won’t feel the brunt of these changes, however for those whose fixed-rate term is coming to an end, it’s important to look at their options now that the market is shifting.

Predictions for RBA cash rate hike

A research note from Westpac chief economist Bill Evans has released changes to the bank’s initial economic outlook amid the most recent COVID outbreak. Initially, Westpac predicted the RBA’s hike in cash rate would be in February 2023, however, experts are now forecasting the RBA could raise the cash rate by 15 points in August, followed by another increase of 25 points in October.

Despite changes in expert forecasting due to inflation, RBA Governor Philip Lowe has been strong on his stance that the central bank is unlikely to increase the cash rate until 2024.

 

FHB scenario 1

 

A challenging and very rewarding outcome for broker Max Harris and his first home buyer clients! As not all lenders will accept company title units as well as a parental guarantee, securing this deal was an amazing achievement for our clients.

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