The impact of interest rates falling on buying and selling your home in 2024

What you need to know about the housing market as the banks predict interest rates falling

With the current market preventing many buyers from purchasing a home, there is hope for interest rates falling at the tail end of 2024.

Interest rates are at a notable high, with new owner-occupied home loan rates sitting at an average of 6.3 per cent as of April 2024, compared to 2.4 per cent in April 2022.

Interest rates are influenced by the cash rate which is determined by the Reserve Bank of Australia (RBA), meaning all eyes are on the RBA’s next update to see whether rates will change or hold at the current level.

These decisions are made based on a variety of factors, including inflation. If inflation stays high, so will the cash rate. However, if inflation decreases, the cash rate and interest rates will likely follow suit, prompting more people to move house.

The big four banks in Australia have weighed in with their forecasts predicting interest rates will fall towards the end of 2024, with Westpac, NAB and Commonwealth banks predicting a decrease in the cash rate over the next six months and into next year.

Understanding the impact of lower interest rates on homebuyers

So, what does this mean for those of you holding out for a chance to get into the housing market?

Buying a new home during a period where interest rates are falling can be advantageous for several reasons:

1. Lower Monthly Payments: Lower interest rates mean lower monthly mortgage repayments, making homeownership more affordable.
2. Increased Buying Power: When interest rates are low, a wider range of properties are more likely to be within your budget due to a lower cost of borrowing. This might allow you to buy a larger home or one in a more desirable location.
3. More Favourable Loan Terms: Low interest rates often come with more favourable loan terms, including better fixed-rate options and potentially lower fees.
4. Higher Long-Term Savings: Over the life of a mortgage, lower interest rates can result in significant savings on interest payments.
5. Greater Investment Opportunity: Real estate is a common investment opportunity, and buying at a time when borrowing costs are low increases the potential for return on investment, especially if property values rise.
6. Economic Timing: Interest rates falling often indicate favourable economic for property investors when the market may be more stable and the economy is supportive of homeownership.
7. Improved Market Conditions: Low interest rates can stimulate the housing market, leading to more inventory and competitive pricing. This can provide more options and potentially better deals for buyers.

However, as more people enter the market, property prices could soar due to supply and demand. So, it is important for any buyer to consider their own situation.

Lower interest rates can also be a good time to sell

Selling your home when interest rates are falling can be a smart move for several reasons:

1. Increased Buyer Demand: Lower interest rates attract more buying with borrowing costs typically reduced.
2. Higher Selling Price: With more buyers competing, you might sell your home for a higher price. Bidding wars can also sometimes drive up the final sale price.
3. Faster Sales Process: Increased buyer interest often leads to faster sales. Homes tend to spend less time on the market, reducing the stress and uncertainty of a prolonged sale.
4. Better Negotiation Position: Sellers in a low-interest-rate environment are in a stronger position to negotiate terms, including sale price, closing date, and contingencies. Buyers may be more willing to meet your terms to secure a deal.
5. Market Timing: Selling when interest rates are low may align with a peak in the housing market. This timing can maximise your return on investment, especially if you bought the property when rates were higher.
6. Gain Financial Advantage: If you plan to buy another home after selling, low interest rates can benefit you as a buyer as well. You may be able to secure a more favourable mortgage rate on your new home compared to your existing one.
7. Attractive Financing Options for Buyers: Buyers have more access to attractive financing options during periods of low interest rates, including better loan terms, lower down payments, and easier qualification criteria, making your home more appealing.

Overall, selling your home when interest rates are low opens up great opportunities: you can sell quickly, potentially at a higher price, and enjoy a smoother transition to your next home.

Obviously whilst we are not real estate agents or bankers, the property market has a big impact on our business.

As both buying and selling activities surge, Acrobat Removals are always prepared to handle the increased demand. Our team of professional movers is ready to assist with all aspects of your move, ensuring a smooth and stress-free transition to your new home.

And if you have a gap between settlement on new and current home, never fear, our world-class storage modules provide a cost-effective solution to ensure a smooth move.

Thinking of moving in 2024? Request a free quote today!