Australian housing affordability best in 12 years
Record low interest rates have helped drive housing affordability to its most favourable level in 12 years during the March 2014 quarter, according to the HIA-CBA Housing Affordability Index.
HIA’s senior economist Shane Garrett said that as the official cash rate remains at a steady 2.50% for the ninth consecutive month, the RBA has signalled that interest rates are set to remain low for some time. “As home price pressures ease off, we expect home owner affordability to remain reasonably favourable for the foreseeable future.”
The continuation of record low interest rates, combined with decelerating home price increases and growth in earnings over the quarter saw the HIA-CBA Housing Affordability Index improve to its most favourable level since March 2002. “The HIA-Commonwealth Bank Housing Affordability Index improved by 2.1% during the first quarter of 2014 and affordability is now 10.8% more favourable than a year ago,” said Garrett.
Mozo’s home loan database shows many standout mortgage interest rates right now in the market. For example, on a $300,000 home loan there are 109 out of 342 products that have a variable rate under 5%. HSBC Bank recently reduced its 2 year Fixed Rate Home Loan to 4.58%, followed by eMoney's Plus Full Doc at 4.65% and Newcastle Permanent's Fixed Rate Home Loan at 4.69%.
“Increases in home prices over the past year have been significant. However, the impact of lower interest rates and continued earnings growth has ensured that home purchase affordability has improved over the past year for existing home owners and those on the cusp of entering the market in the short term,” Garrett said.
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