Relaxed Lending Criteria and Variable Interest Rates Increase Investors Appetite

Relaxed Lending Criteria and Variable Interest Rates Increase Investors Appetite

The latest news received today is that RBA hold back on further interest cut!

Thanks to RBA holding back on the rate cuts to below 3 percent, thereby increasing the investors appetite to invest in property market.

According to Australian Bureau of Statistics, there is an increasing activity among Australian investors as the average rate for an investiment loan remains at 3.8% which is above 0.1%, higher the average rental yield of 3.7% in most major cities of Australia, making property investiment a more attractive as investor outlay is less with higher returns.

Additionally, CoreLogic research team states that investor activity is likely to ramp up as the prospects for capital gain start to become more widespread and the spread between rental yields and mortgage rates remains around record lows.  Capital city gross rental yields are tracking at 3.7% compared with three year fixed rate mortgages for investment purposes tracking around 3.8%.  In the past, rising home values and greater participation from investors has seen first home buyer activity reduce.

The First Home Loan Deposit Scheme, which goes live in January next year is likely to be oversubscribed, however we aren’t expecting this program to make a substantial difference to overall first home buyer participation rates considering the scheme is capped at 10,000 buyers, which equates to less than 10% of first home buyers numbers over the past year.   ResearchMortgage TrendsProperty News

Meanwhile,

Trade talks between the United States and China came back in force overnight as a deal continues to be dangled in front of global markets on optimism that an agreement could be signed by the end of November. Furthermore, a trade breakthrough in Asia-Pacific between 16 countries in the Regional Comprehensive Economic Partnership (RCEP) looks to be close to sign off by 2020 after seven years in the making despite India pulling out.The US Dollar Index (DXY) which measures a basket of currencies against the greenback rose 0.43% to 97.54 on the day as higher US yields on both 10-year treasury notes and 30-year bonds support the worlds most traded currency.The EUR/USD shifted lower overnight ahead of incoming ECB President Lagarde’s first speech this morning. The pair slipped from 1.1173 to lows this morning of 1.1127 as markets positioned themselves for hints of a change monetary policy from her predecessor Mario Draghi. Lagarde though avoided the topic at the award ceremony the President attended and called for “strength, resolve and courage” for the Eurozone.
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