Property Centerpiece touched base with award winning mortgage broker Daan Jansen of The Finance Alliance to find out first hand, how the recent changes or adjustments in interest rates have translated to the home buying sector and what he sees for the future.
When asked how the horizon is likely to shape up for first home buyers, Daan predicted that we can expect that over the long term, First Home Buyers incentives will remain available. As the prices rise, it will be more challenging for first homebuyers to get into the market & hence the availability of incentives.
When asked about the effect of the recent rise in interest rates and its deterrent on buying property, Daan stated that whilst construction prices are through the roof, inflation is high and employment is at a record high and interest rates are on the rise, it will have negligible effect on the property market.
Home buyers still want to buy a home but having said that, there will be conversations to be had with clients (not just first home buyers) around strategies and back up plans that need to be in place to deal with further rate increases.
Daan provides all his clients with a scenario of repayment: current & proposed.
A proposed repayment with a 1% increase and a proposed repayment with a 2% increase. If clients are comfortable with a 2% rate increase, then Daan knows it is a good situation.
Looking forward, Daan said, that as opposed to past years, where home buyers led the market growth, this will change and whilst there is likely to be a temporary dip in confidence and clearance rates, we will be witness to a massive boom led by investors and speculation.
He expects that the property market will go through a massive boom, followed by a big bust at the end of 2026 or early 2027.
Daan believes that the rates will come crashing down, as the market crashes in 4 or 5 years, which will be a part of cyclical events. Daan believes that clients will need to prepare for this with cash buffers saved to weather the storm, or even better, says Daan, cashed up to buy property at a low, when people are looking to unload unsupportable debt.
Daan expects that the recent increase in interest rate rises will not affect the market.
When asked about current upcoming trends, that Daan is expecting to see, he replied that as a mortgage broker, he is expecting a lot of refinance applications. He believes that mortgage brokers will be entering their busiest times yet, over the next few years.
As property owners will be coming off their low fixed rates, they will be in for a shock & will be looking to refinance for the best available rate.
The further the rates increase, the more sensitive clients will become to saving a few hundred dollars on their loan repayments. At the present time, property owners are refinancing only when there is a substantial benefit, as most are still sitting comfortably with their income stream and reserves.
As rates increase, many property owners with loans will start cutting unnecessary luxuries out of their spending habits.
As an example, Daan said he spends $ 500 a month on coffees, whilst going on morning walks with his wife, baby & their dog. That said, he can easily cut the morning coffee out as a counter measure to an increased repayment on the mortgage.
When asked if The Finance Alliance has had a huge adjustment in enquiries, he advised that there has been a small drop in first home buyers looking to obtain funds, whilst he has noted an increase in requests for refinancing.
And whilst no one has really been scared off due to interest rate rises, some have slowed down to ponder their next move, but it is most likely that this pause, is just temporary. As once the dip passes those buyers will realise that they cannot wait for property to become cheaper and will resume their direction to buy with the market forcing them to act.
Daan and his team service clients Australia wide and thanks in part to Covid, they now welcome online meetings. The staff of The Finance Alliance works from home across Australia and internationally and service clients Australia wide, aiding with funding for a variety of applications including Residential Home Loans, Commercial Loans as well as a SMSF Loans, Property Development Finance, Personal Loans, Car Loans & Equipment Finance.
About Daan Jansen:
Daan has been in the financial industry for 19 years & has worked around the world helping thousands of clients, including working at ING bank in the Netherlands.
After moving to Australia, Daan was nominated in back-to-back years as Best Newcomer in Victoria at the Better Business Awards, an annual awards ceremony hosted by The Adviser. Daan took home the award on his second nomination, setting him up for a great career in the Australian Financial industry.