State of the Home Loan Market & the Australian Economy

It’s interesting to note that although home loan interest rates have recently been dropped by a quarter percent that the state of the property market is still poor. Why is this? It’s pretty simple really, not only have home loan interest rates increased substantially over the last several years but the cost of fuel and inflationary pressures have had an impact too.

When you combine these factors and the flow on effects of higher fuel prices which trickle down to the food we buy and other goods which require transport to reach the retail sector there is a considerable amount of strain placed on the household income.

What was once ‘disposable’ income has now become essential to simply maintain a reasonable lifestyle and in a lot of cases put food on the table.

So when will this all change? Not for a while yet, although the home loan interest rate has decreased for the first time in several years there is simply not enough income liberated from this to breath life into consumer confidence levels.

The market will bounce back as it always has done although this will take several months to occur, what we will see is the RBA (Reserve Bank of Australia www.rba.gov.au) cutting interest rates in the new calendar year two to three times. Once this happens there will be enough income liberated for people to start feeling confident in opening their wallets and spending again.

The flow on effect will be felt in the retail sector and in the property market, jobs will be created and money will start to flow within the economy again.

What this means for the home loan market is an increase in overall enquiries and home loan settlements. Time and time again I have seen this occur in the industry and with every downturn there is an eventual upturn, it is a matter of when not if and it all comes down to time and timing of economic factors which all have an impact.

Aussie Wise Finance Group has been through the ups and downs of fluctuating economies and will again be there when the market moves into positive territory. To find out about me and my organisation simply follow this link to www.aussiewisefg.com.au or you can give me a call to have a chat.

Bookmark this blog as I will be regularly updating it with market goings on and will run a special in a few weeks on the sub prime crash or as is known in the industry the current ‘liquidity crisis’…. More on that soon….