In the past week, the much anticipated rate hike materialised, and as expected there was an increase of 25 basis-points taking the offical cash rate to 0.35%. This is the highest since the start of the pandemic in March 2020, when the cash rate was sitting at 0.5%, before quick rate-cuts in succession brought it to a standstill 0.1% for the past 24 months.
Consolidating from various forecasts, many predict the May 2022 rate hike to be a momentum shift resulting in multiple hikes to come in the next 36-48 months. This is accurately reflected in the longer-term fixed deposit rates, with 5-year rates now tapping 4% (and borrowing rates well exceeding this threshold). This might be welcoming news if you have capital lying around, but what if one has a sizeable mortgage on their shoulders and are struggling to make ends meet as it is?
Whilst nothing is a guarantee, an over-leveraged mortgage is a dangerous position to be in as we see market momentums reverse, in particular the official cash rates. Preparations need to already be underway, in order to factor and cope with the potential subsequent rate hikes. As the cost of up-keeping a mortgage increases, this tends to cool down the already over-extended real-estate market.
One of the viable strategies to consider is the return on investment for rational and astutely executed renovations. As the rate of growth in the property market slows, it is harder to make a sale on real-estate in its “as-is” condition. Whether it is revitalising the bathroom or upgrading the kitchen, the key is to have a point of difference in order to attract attention and value.
Plan and stay ahead of the dynamic and volatile market. Formulate your strategy, adapt and execute it accordingly. Get in touch with Simply Frameless for your Frameless Glass renovation requirements and ideas.