2023 EOY Finance Review

As I put pen to paper to begin writing this column, I’m suddenly blown away as I look back at one of the wildest years I’ve seen in the Finance Market. In January, we’d already seen a number of rate rises as the RBA attempted to pull the hand breaks on inflation. In hindsight this was probably left a little late, and still, at the time no-one could have predicted just how far interest rates would climb, in just one year the Reserve Bank has increased the cash rate by 3.6%

Those of us that had locked their home loans in 2 years ago (in some cases) at less than 2%, were due to role over to a variable rate somewhere between 5% and 7% depending on their lender.

The good news for many of us was that our property values in most cases had grown significantly, which put us in a great position to chase the most competitive interest rates in the finance market if we could show serviceability to refinance.

Banks saw this coming a long way off and began a pricing war, offering up to $5,000 in cash back bonuses for clients to switch banks and change their colours. Despite the challenges many applicants saw in meeting serviceability guidelines, with bank test rates climbing higher than 9%, refinance applications as a percentage of all other application types increased from less than 20%, to more than 50% of all applications submitted in Australia.

It seems there is no sign that migration to the Sunshine Coast is slowing and as land shortages continue, many new home buyers are turning to existing property as a faster solution for permanent housing and home ownership. Meanwhile the rental market has also pushed many renters into the search for a cheaper mortgage repayment than their current weekly rent payment. All factors leading towards increased demand for our existing properties.

Commercial spaces that had remained vacant since the beginning of covid 19 are starting to be replaced with new and expanding local businesses and with the simplified and isolated assessment process for SMSF approvals, many have turned to SMSF for their commercial and residential property purchases where they are tapped out on their personal balance sheets and serviceability tests.

Now as I look into the crystal ball for 2024, I’m left feeling like the finance and property market is more unpredictable than ever, however, with many economists suggesting national property growth between 1-5% for 2024, as well as an eventual rate correction, my outlook remains positive for our local homeowners and investors.

With talk of rent yields still on the rise, wage growth at ~8%, a potential correction of interest rates at some point in 2024, continued growth in our property market, and potential for bank test/buffer rates to ease, I’m excited to see what opportunities lie ahead for our property investors in 2024.

If you’d like to stay ahead of the game with live changes to the finance market, lending guidelines, and interest rates during 2024, please feel free to subscribe to my monthly Sunny Coast finance update…. And of course, if you’d like us to review your current lending, or look at your potential to move on an investment opportunity in the coming months, please give us a call on 1800 11 LOAN.

Luke Meisenhelter

With over 14 years in the finance industry Luke has helped countless clients achieve their finance goals. As the Managing director and founder of Loanright Financial services Luke now manages a team of experienced mortgage brokers with a combined total of more than 60 years finance experience in residential and commercial lending as well as business and asset finance. As a leader the finance industry Luke has become an innovator in the game, mentoring and coaching other industry professionals and pushing the limits on process driven workflow structures, systems, and accountabilities, aimed at providing the best possible financial outcomes for all clients in the shortest possible time frames. Throughout his years in the finance industry, Luke has become increasingly frustrated with the quality of information available to consumers in the property and finance market, most of which is biased and designed to capture leads by creating fear and offering a magic solution. It’s Luke’s goal to share his knowledge and provide free, non-biased, quality sources of information on finance and financial concepts to as many Australians as possible.