If you have investment properties or a home loan then your interest expenses will be lower. Lenders are likely to review their lending criteria and you may find that you can borrow more.
The news of more potential rate cuts is likely to keep the residential property market stimulated. With Spring fast approaching, you will find plenty more buyers coming out to snap up residential property. This is likely to keep the Australian residential markets quite buoyant for some time to come. Sydney, in particular, should continue its strong price growth.
Investments in savings accounts or cash investment options in superannuation are likely to provide very low returns. This will have a negative impact on retirees where retirement income is linked to cash or fixed interest.
Also, with low inflation and upward trends on property prices, rental yields are likely to stay flat or even decline more. This means that finding a good yielding property will be more difficult. It make take a few years before we see rental yields start to climb again.
What you need to be doing
- Review the interest rates on your current variable-rate loans - if they are currently over 4% for owner-occupiers or over 4.25% for investors then you are paying too much in this climate.
- If you were thinking about buying a residential property then it is still a good time to do it.
- If you have savings in low-interest bearing accounts then you should reconsider where you have your money invested.