Lower interest rates can save Brisbane, Queensland homeowners

If the Reserve Bank of Australia cuts twice on Tuesday, home loan repayments could be up to $700 a month, but probation for homeowners could mean the waste of rising home prices is behind increased borrowing power.

Exclusive analysis of the comparison markets undermines homeowners in the suburbs of Brisbane and parts of the Queensland area, with the initial rate using median home price data and mortgages at 6% if interest rates lower rates by 25 and 50 basis points (BP) on May 20.

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Brisbane’s biggest winner will be mortgage holders on the new farm, with an average cost of $2.87 million.

A 25bp lower tax rate would mean saving $367 a month on a typical new farmhouse mortgage, while a 50bp drop in price would save $729 a month.

In Gumdale, the average cost of a home is $2.4 million, cutting 25 barrels means saving $312 a month, while the 50 barrels cut costs equal to $620 a month of mortgage bills.

At ASCOT, mortgage holders who pay the average home can save $306 (cut 25bp) and $620 (cut 50bp) per month.

On the other side of the scale, a property owner paid back a unit at Kooralbyn, with a median of $316,000, based on a 0.25 percentage point cut and $80, a monthly decrease of $40 based on a 0.5 percentage point reduction.

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Outside Greater Brisbane, a 25 barrel reduction would mean a monthly saving of $158 on median home mortgages, $158 on the Gold Coast, $146 on the Sunshine Coast, $73 on Townsville, $82 on Cairns, $93 on Toowoomba.

If Curry Royal National Gathering bets drop 0.5 percentage points from cash rates, monthly mortgages for typical homes will be cut in $314 on the Gold Coast, $291 on the Sunshine Coast, $146 on Townsville, $163 on Cairns, $185 on Toowoomba.

While those who are already on the property ladder can expect that those waiting to go public may face price increases if Australian reserves lower interest rates.

Comparative market real estate expert Andrew Winter said lowering interest rates will increase borrowing capacity and buyers’ demand, which could lead to buyers offering more properties and lead to higher house prices.

“The markets in Brisbane, Adelaide, Perth and Sydney are very resilient, mainly because there is not enough supply to meet demand,” he said.

“Another round of cuts could add fuel to the fire.”

The mortgage selection data suggests that if someone can borrow $641,000 in Queensland, the borrowing of 25bbp will increase to $658,539.

This figure will be cut at $676,835 with a 50bp cut and a 100bp cut of $715,855.

Homebuyers who currently have $750,000 in borrowing power will see that figure increase to $837,584 and lower interest rates by 1 percentage point, while those who can borrow $1 million today may receive a $1.116 billion mortgage after the same cut.

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Mortgage broker Deslie Taylor or Mortgage Choice Ormeau said she is seeing clients postpone purchases and hopes interest rates will drop.

“They think they can buy this, but what I want to make sure is that they are financially comfortable enough to afford the housing at current interest rates,” she said.

“I advise them not to over-invest in anticipation rates, but to work on the worst-case budget.

“Reducing interest rates may come, but they will never come back to themselves.”

Mrs Taylor said many mortgage holders want to reduce minimum repayments, so due to the cost of living crisis, they can re-indulge in luxury goods they have given up.

“They hope they can recover their lives,” she said.

“They might be able to have that takeaway coffee again, have breakfast or dinner again, or finish eyelashes and nails.

“I also think there are a lot of people limiting the amount they will pay for the home because they don’t want it to affect their lifestyle.

“They don’t want to pay off the mortgage, not live and pay off the mortgage.”

Mr Winter said while buyers may be eager to “step into the door” before market conditions become more competitive, the ability to borrow more money will not make it easier for most people to buy a home.

“The main obstacle for most first-time home buyers is raising deposits, which can be very challenging when value growth exceeds wage growth in such an extreme way,” he said.

“The good news is that there are many low and stamp duty incentives that are open to the first home buyers.

“Save 5% more than save 20% can be achieved.

“There may be a rush to beat the ‘fear of missing’ crazy fear (but) the best time to buy is that you are ready.”

The Mortgage Choice Home Loan Report survey found that 71% of respondents who wish to buy a home rely on their savings to help pay the deposit, 13% are using family cash gifts, and 23% are borrowing funds.

A total of 35% of the homeowners surveyed owed $250,000 – $500,000 on their main mortgage, 23% owed $100,000 – $250,000, while 18% owed $50,000 – $750,000.

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