“Are rates causing any interest?” is the Theme of this month’s HTW Month in Review

Opinion on the Melbourne residential market here are some highlights:

– In the past 12 months we have seen an unusual event where multiple interest rate reductions do not appear to have spurred on the residential market in the same way they have over previous times.

– Efforts of the RBA to stimulate the home finance sector in 2012 appear to be having a mixed effect on home loan approvals within Victoria while also considering incentives (first home buyer reduction and stamp duty savings) being added and removed during the year.

-The tightening of credit controls by the banks, and the uncertainty around medium to long term job security, are likely to be at the heart of buyer resistance to be enticed by the offer of cheaper money……… for the moment anyway.

– The impact of consumer sentiment / job security is clearly reflected in the decline in approvals for home loans for properties located in the growth corridors of Melbourne and the first home owner markets.

– Job security is a major influence and the subdued property markets can have a strong correlation.

– The growth suburbs (first home owner markets) are among the most sensitive when it comes to changing interest rates due to the uncertainty of rates matched with the fixed incomes of residents in such areas.

– In these markets families are usually borrowing to their maximum capacity and interest rate changes can correlate directly to the families weekly expendable income amounts and impact day to day living standards.

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Thanks to Therese from Alphabroker