Latest news with #JulianFinch
News.com.au
23-05-2025
- Business
- News.com.au
‘Soul destroying': Rates coming down is a good thing for mortgage holders but could lock other Aussies out of the market
The official cash rate was slashed this week by 25 basis points, down to 3.85 per cent, but while mortgage holders feel relief, the good news could also screw over Aussies trying to buy right now. Lower interest rates should restore confidence in the market, and increase prices, in turn making young buyers panic. I would know, I am one. All four big banks came to the party on Tuesday and confirmed that customers would be getting a rate cut on their variable home loans. Financial expert Julian Finch said that a drop in rates automatically means Aussies will have higher borrowing capacity. 'Which will ultimately mean the competition increases and the prices rise,' he told As someone trying to buy a two-bedroom apartment in Sydney right now for under $1 million the possibility that house prices could increase is an actual nightmare. Mr Finch warned that first-time home buyers need to start making a 'huge effort' to get into the property market, if not ASAP, then at least before January 1st. This is when Anthony Albanese's election promise of 5 per cent deposits for first-time home buyers will kick in. The Albanese government will cover a portion of a first-time homebuyer's loan, so Aussies only have to borrow 5 per cent and do not have to pay lending mortgage insurance. From January, a first homebuyer will be able to purchase a $1 million property with just a $50,000 deposit. The medium unit price in Sydney is $1,030,000. The combination of rates dropping and 5 per cent deposits means the market is set to flood with buyers who were previously locked out – which, according to Mr Finch, confirms my fears that prices will surge. 'My prediction is that prices will rise in direct correlation with the easing interest cycle. If a 0.25 per cent rate cut means a 2-3 per cent increase in borrowing capacity,' he told 'I believe prices will rise along the same trajectory – so far we have had 0.5 per cent in cuts for 2025 – if we have two more this year – we will see prices up between 10-12 per cent for the year.' MORE: Named: Aus' $60k homes, cheapest suburbs The idea that prices will soar and there will be more competition on the market is a terrifying prospect. Suppose in the next 12 months, prices rise by 10 per cent, which hypothetically would mean million-dollar property would now be worth $1.1 million. In that case, our borrowing power would not have increased enough for us to be able to afford it. This kind of price threat makes me want to buy something immediately, but we've been trying to buy for months with zero luck. My partner and I aren't first home buyers – well, I am, and he isn't. He sold his one-bedroom apartment to allow us to upsize and buy something more suitable for our future, and upsizing in Sydney these days means a single extra room. When we started looking, we even mentioned wanting a ground-floor apartment with a small patch of grass or a courtyard. We naively planned on getting a place with space for our dog or somewhere to put a barbecue, but now we're just happy if an apartment block doesn't need $6 million worth of waterproof repairs. At some point, we had dreams of two bathrooms, but six months into our property journey, we'd just be happy with a place that doesn't smell damp. The Sydney market is cooked, and trying to find an apartment for under a million bucks is pretty soul-destroying. Even though to us that feels like so much money and will result in us being in a fair amount of debt, you're at the lower end of the market. When we first started our home-buying journey, we'd go and look at three or four properties on a Saturday and usually pause and have a nice lunch or something – or not bother to see a property if it interfered with any social plans. Now, we treat house hunting like a military operation. We leave the house at 9am on Saturdays for the first home inspections and usually don't finish up until at least 2.30pm. There's no way we're stopping for lunch because we try to see as many properties as possible, even really ugly places! Our days are filled with trying to find parks, dealing with dodgy intercoms and evasive agents and being told an apartment has a vista, when it looks out onto a main street. There's also the heartbreaking reality that price guides or estimates are deceiving, you basically want to always add an extra $100,000. I was verbally told by an agent that a place with a price guide of around $800,000 just sold for $940,000, and it didn't come with a car space. Similarly, I inspected a property whose agent told me the market feedback was in the $800,000 range. The property then sold for over $900,000. It is tempting to feel like giving up, and property expert Jack Henderson certainly hasn't lifted my spirits because he told me that there's no doubt in his mind that Sydney properties will keep increasing in value. 'Absolutely it is going to make prices go up,' he said. Mr Henderson said that if you're fearful of being locked out of the Sydney property market, you should consider relocating. 'If you're not rich you shouldn't live in Sydney. It is where the wealthy people live, the wealthy people live in Sydney that is just a fact,' he said. Mr Henderson said property prices are just going to 'get worse and worse' and become more affordable, and he'd advise young couples without a high joint income to move out. 'If you're not a high income earner of earning between $200,000 to $300,000. I don't think Sydney is a great place to live because you can't afford the lifestyle,' he said. The market already feels competitive with investors and downsizers, and if things heat up even more, I'm afraid we'll be locked out forever … maybe we really can't afford Sydney.
Herald Sun
22-05-2025
- Business
- Herald Sun
RBA cut ‘straps rocket' to property market
The Reserve Bank of Australia's latest interest rate cut has given Aussie homeowner's plenty of reason to rejoice. However, experts warn Tuesday's decision could prove to be a double edged sword that could see investors dominate the market, while first home buyers continued to feel the housing squeeze. Money expert and mortgage broker Julian Finch, founder and CEO of Finch Financial, said while rate cuts were often perceived as a means to enhance housing affordability, they typically had the opposite effect. 'People think rate cuts will make housing more affordable, but they rarely do,' he said. 'They drive demand, increase borrowing power and send prices up. 'That's what we're seeing now and it's only going to intensify if the RBA cuts again.' The RBA on Tuesday cut the cash rate by a quarter point to 3.85 per cent in a bid to ease pressure on mortgage holders, grappling with high living costs and elevated interest repayments. RELATED Shame list: 72 Aus banks refuse RBA rate cut Rate cut reality check as 60pc of Aussie borrowers still struggling 11 homes by 40: Migrant reveals Aus secret The RBA's Michele Bullock during a press conference following the board's announcement to cut the interest rate by 0.25 percentage points. Picture: NewsWire / Nikki Short On an average Aussie loan of just above $600,000, a single rate cut of 0.25 per cent will save about $1200 a year, while the latest cut could provide savings of around $2400 a year. With at least one additional rate cut likely by year's end, Mr Finch said the RBA's next move would have a significant psychological effect on the market, including the likely impact on the structural imbalance between supply, demand and access. 'We may get one more rate cut, but that won't fix affordability. What's needed is smarter housing policy, increased supply and lending practices that prioritise long-term stability over short-term boosts,' he said. 'Another cut might keep the economy moving but if it fuels another property price surge, we risk leaving more Australians behind.' Leading finance expert and CEO of Finch Financial Services Julian Finch. Mr Finch said the latest RBA cut had investors and cashed up buyers laughing all the way to the bank. 'The latest RBA move has already kickstarted the market and another rate cut is going to strap a rocket to it. Affordability is going to get worse, not better,' he said. 'Investors are in a stronger position to move quickly; they understand the game. A rate cut opens the door for them to re-enter, refinance and scale. 'Meanwhile, first home buyers are trying to keep up while facing rising prices and intense competition for limited stock.' Mr Finch urged borrowers to avoid emotional decisions based on rate movement hype and instead focus on long-term strategy and sustainability. 'If you're buying, don't just ask how much you can borrow, ask how much you can comfortably repay if rates shift back up in the next two or three years,' he said. 'If you already have a mortgage, now is the time to renegotiate, refinance or explore fixing part of your loan. Don't wait for the next rate change to act.'
