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‘Hold off fixing home loans’, says property group

investor-stories
1 minute read

‘Hold off fixing home loans’, says property group

by Emma Ryan 12 March 2020 1 minute read

A property body has advised investors to resist fixing their rates, despite the latest ABS figures showing a 10.4 per cent jump in the value of loans over the past year.

Kevin Young
March 12, 2020

Kevin Young, president of Property Club, has urged property owners not to fix their interest rates.

“The crash in the international bond market will pave the way for near zero fixed home loan interest rates in Australia,” Mr Young said.

“Property owners should hold off fixing their home loans as they will substantially fall over the coming months.

“This is because the government bond market is a forward indicator of future fixed interest rate movements and the bond market is now spiralling downward in major financial markets where Australian banks source their funds.

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“For example, the UK has now joined the club of nations with negative-yielding debt for the first time, with government bonds of maturities up to seven years dipping below zero.”

Meanwhile, in the Eurozone, “several governments are able to borrow at deeply negative rates, with all of Germany’s bonds traded at a yield below zero, and its 10-year benchmark touched an all-time low of minus 0.91 [of a percentage point] on Monday”, Mr Young added.

“In the US government bonds, the yield on the benchmark 10-year Treasury touched a record low of less than 0.4 [of a percentage point], while the 30-year Treasury yield slid below 1 per cent — an unprecedented event,” he said.

“This downward movement in bonds indicates that fixed interest rates will fall substantially in the next few months. This is particularly the case for two and three-year fixed interest rates in Australia which could fall to below 1 per cent if bond yields continue to slide.”

‘Hold off fixing home loans’, says property group
Kevin Young
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About the author

Emma Ryan

Emma Ryan

Emma Ryan is the deputy head of content at Momentum Media.

Emma has worked for Momentum Media since 2015, and has since been responsible for breaking some of the biggest stories in corporate Australia, including across the legal, mortgages, real estate and wealth industries. In addition, Emma has launched several additional sub-brands and events, driven by a passion to deliver quality and timely content to audiences through multiple platforms.

Email Emma on: [email protected]Read more

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