Here’s an incredible fact! The way rates are going, mortgage repayments may soon be cheaper than renting!
It’s true! As if low prices, and increased BC’s (due to rate cuts), aren’t enough to flood the market with First Home Buyers! Now it’s actually going to reduce their weekly outgoings!
I recently talked to someone about a brand new house in Coomera on the Gold Coast. It’s a beautifully finished, fully rendered, four bedroom home, with ensuite, and Ducted Air! In the current market it would sell for about 410k. It currently rents for $430 per week. Interest repayments on a mortgage of 389k (410k – 21k First Home Owner’s Grant) currently average $452 per week. But, if we get the 0.5% cut widely tipped for February then that would reduce to $414, that’s $16 less than rent!!! Who would’ve thought we’d ever see that in a growing metro market!
I can imagine a couple, ten years from now, telling their kids. “In 2008 this great thing happened. It was called the Global Financial Crisis. And it was very bad for many people. But for us it was great. First, it brought down house prices, then, it brought down interest rates so we could get a loan, then the repayments came down so low that it was cheaper than renting!!! So kids, we call it the ‘Great’ Global Financial Crisis.”
There might even be a few investor who, in hindsight, feel the same way. Time will tell…