It was another quiet month as the Reserve Bank have left interest rates on hold, although the Commonwealth Bank have gone out on their own and increased the variable rate by 0.1% much to a lot of disapproval. Let’s hope other banks don’t follow suit.
The government decided not to cut the First Home Buyers Grant off at 1st July 2009 so If you are a First Home buyer, the scheme will continue in its current format until October 1, 2009. This means that those buying existing homes will receive $14,000 and for those building new homes $21,000.
Adjustments to the scheme from October 1, 2009 will see the First Home Owners Boost scheme reduced - this means those buying existing homes will receive $10,500 and for construction of new homes $14,000.
As of December 1, 2009 the First Home Owners Boost scheme will cease and the existing $7,000 grant will continue to be available to all first home buyers.
Unfortunately though, first home buyers are starting to taper off due to the reduction by most lenders of their lending loan to value ratio to 90% (meaning a 10% deposit is required).
From economic outlooks, it looks like there will be a flat economy in 2009/2010 but should return to economic growth in the years thereafter with significant growth in 2011-2013. As it is, property values are experiencing a recovery from the modest 3 per cent falls seen in 2008. Over the first three months of 2009, national dwelling values increased by 1.6 per cent with most of the capital gains coming in February.
Variable interest rates are likely to remain low for some period of time and investors will continue to return to the market. However, fixed rates have already started to increase which seems to indicate that rates won’t go lower and the next move will probably be upwards.
Unemployment is expected to rise to 8.5% and although this seems high, it also means that 91.5% of people employed will retain their jobs.
