Investors Appear To Be Backing The Property Market In 2020

Over the past few weeks, I’ve noticed an increased volume of enquiry from Property Investors who are looking to invest in both the housing market and the acreage sector as many cashed-up investors are searching for better % returns whilst interest rates remain at such historically low levels.

For example, “Rates for savings accounts have been steadily dropping since last year, and that trend will only accelerate when the Reserve Bank decides to reduce the cash rate in the coming months. When that happens, we’ll likely see larger cuts levelled against savings accounts than home loans, as banks try to maintain a healthy margin between the two. 

Currently, the average ongoing savings rate sits at 0.98% p.a., while the average among the big four banks is 0.58% p.a. Among savings accounts tracked by Mozo, only 10 offer rates of at least 2.00% p.a. 

As expected, neobanks have emerged as the ones to watch in the savings arena, with 86 400, Up and Xinja currently offering maximum rates as high as 2.25%. Newcomer Volt Bank is also slated to roll out its savings account this month. When it does, it will come with a no strings base savings rate of 2.15% p.a.” ~ Banking Expert, Peter Marshall from Mozo said earlier this month.

Term Deposit Interest Rates: February 2020

Peter Marshall also shared that…

”The year has gotten off to a shaky start for term deposits, with many banks already making cuts in anticipation of an upcoming move from the Reserve Bank. Right now the average 6 month term deposit interest rate is at 1.49%, the 1 year rate is 1.44%, and the 3 year is 1.40%. 

Judo Bank continues to lead the market for terms between 6 months and 5 years in length, offering 2.05% for 2 year terms, 2.15% for 3 year terms, and 2.25% for 4 year terms. Among term deposits tracked by Mozo, those from Judo Bank are the only ones that offer savers upwards of 2.00% p.a. If you need some extra reassurance, all deposits of up to $250,000 are covered under the Government Deposit Guarantee Scheme.

If you’re after some flexibility there are still a handful of savings accounts with rates of 2% or above, but you’ll either need to move your money every couple of months once the bonus period ends or meet fulfill a few conditions, such as making a minimum deposit every calendar month.”

With the sharpest current offerings for home loans available as of 10/2/20…

• Owner Occupied – Variable Principal & Interest Payments – 2.80%

• Owner Occupied – Fixed Principal & Interest Payments – 2.74%

• Investment – Variable with Principal & Interest Repayments – 3.19%

There are some great opportunities and reasons to invest in this current market, especially with interest rates looking like they will remain low for a while to come as well as with Sydney auction clearance rates on the increase plus the strong uptake of the Federal Government’s First Home Loan Deposit Scheme, the market is becoming more competitive and many property analysts are predicting large capital growth for property throughout the year, for example, “AMP economist Dr Shane Oliver believes Sydney and Melbourne markets look set to gain at least 10% this year”. Source: Azura Financial on 10/2/20

Buying an investment property could likely return more than having your money sitting in the bank and with interest rates this low there are now a lot of properties with potential rental returns that are almost to the point of being positively geared

If you’re wondering how to invest in property, what steps to take, what to look for and whether investing in property is right for you, don’t hesitate to get in contact with me.

Regards

Greg Vincent