Interest rates can be a big part of how people purchase real estate in Adelaide. Low rates can make getting a home loan much more affordable and reduce the amount people have to pay on repayments over the long term. The Reserve Bank of Australia's (RBA) most recent official cash rate cut, and successive trims before that, might make purchasing or constructing a home in Adelaide more appealing, but property owners will likely be on the look out for another cut in the future.
The RBA's recently released minutes from its March board meeting shed some light on this. While the board chose to leave the official cash rate unchanged, the minutes add some context to the decision. The board went in depth into economic conditions across the country and internationally, examining whether a future rate cut could be justified.
For one, the board noted that the earlier February cut and lower exchange rate was supporting the domestic economy enough for them to be satisfied, while investment in the housing sector remains at a more reasonable level.
Interestingly though, the board hinted that another rate cut could be on the horizon. At the moment, the bank is still waiting for the dust to settle and highlighted that there is a bit of uncertainty around how borrowers and savers will react to the interest rates.
In any case, CoreLogic RP Data research said that the February interest rate cut would already save households around $150 a week in interest repayments, based on a 4.9 per cent variable mortgage rate for a $400,000 loan. This could be great news for property owners in Adelaide. Not only could you pay the mortgage on investment property off quickly, but you could also think about expanding with another couple of properties – you might even need to get a property manager on board to handle your portfolio.
With property owners in Adelaide likely already seeing the benefits of the February cut and another trim expected, have a chat with the team at Ray White about owning rentals in Adelaide.