FINANCE

Refinancing activity is at ultra-high levels right now, as owner-occupiers and investors alike try to find home loans with lower interest rates as the Reserve Bank continues to raise the cash rate. 

Borrowers refinanced a record $19.5 billion of loans in November, the most recent month for which we have data, according to the Reserve Bank of Australia.

By way of comparison, that was 20.4% higher than the year before and 88.2% higher than two years before.

The Reserve Bank has hinted that at least one more rate rise is coming. In December, it said it wanted to "return inflation to the 2-3% target range over time" (it's currently 7.3%) and would “do what is necessary to achieve that outcome" – i.e. further increase the cash rate.

So if it’s been a while since you took out your home loan, now would be a good time to think about refinancing.

Rents rise from 4.3% in Canberra to 13.4% in Brisbane and Perth 11.2$

Many property investors enjoyed a big rise in their rental income during 2022.

 

CoreLogic has reported that the median rent for an Australia investment property increased 10.2% during the year. The city-by-city breakdown was:

· Brisbane 13.4%

· Adelaide 12.9%

· Sydney 11.4%

· Perth 11.2%

· Melbourne 9.6%

· Hobart 5.3%

· Darwin 5.1%

· Canberra 4.3%

During 2022, the national vacancy rate fell from 2.1% to 1.2%. To put it another way, the number of untenanted rental properties fell from 21 per 1000 to a very low 12. That forced tenants to compete harder, pushing up rents.

But baring in mind that the interest rates would play with the investors cash flow for sure.

"Rents are still rising in most capital cities and regional areas, with vacancy rates low," according to CoreLogic head of research Eliza Owen.

Between September 2020 (when this period of rental increases began) and December 2022, Australian rental rates increased 22.2% – the largest increase in a 27-month period in recorded history.

If you have been thinking about investing now is the time to ring the broker and get the ball rolling.

Take care out there.

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