4 . Increasing mortgage rates or restricting finance
Even if the RBA doesn ' t move on the cash rate any time soon , mortgage rates are already starting to creep up for fixed rates although variable rates continue to decline . This is likely due to the highly competitive mortgage market - even though demand for finance is very strong , it would be hard for a finance provider to increase their mortgage rates without having a significant impact on market share .
While competition should keep mortgage rates low , it ’ s possible that the Australian Prudential Regulatory Authority ( APRA ) will start to look at ways to restrict lending . This could be through greater stress testing of borrowers , restrictions to loan to value ratios or increased eligibility criteria . Depending how extreme this is , it could have a sizeable impact on house prices .
OWNER-OCCUPER VARIABLE HOUSING RATES (%) June 2021 to July 2021
3.90 3.70 3.50 3.30 3.10 2.90 2.70 2.50
1 / 7 / 19 1 / 8 / 19 1 / 9 / 19 1 / 10 / 19 1 / 11 / 19 1 / 12 / 19 1 / 1 / 20 1 / 2 / 20 1 / 3 / 20 1 / 4 / 20 1 / 5 / 20 1 / 6 / 20 1 / 7 / 20 1 / 8 / 20 1 / 9 / 20 1 / 10 / 20 1 / 11 / 20 1 / 12 / 20 1 / 1 / 21 1 / 2 / 21 1 / 3 / 21 1 / 4 / 21 1 / 5 / 21
Source : APRA , RBA , Ray White
Outstanding loans New loans
5 . Mining and agriculture slowdown
Iron ore pricing continues to hit record highs and May saw a record $ 12.3 billion worth exported to China alone . Meanwhile , Australia ’ s agricultural sector continues to boom . Australian farmgate production is on track for a record-breaking $ 66.3 billion year , driven by higher beef , wool and dairy exports , as well as a sharp recovery in cotton exports .
The impact on property markets is targeted . Iron ore is leading to strong conditions in the Western Australia and Perth markets while good news for agriculture is leading to some strong conditions in a number of small regional towns . Agricultural towns such as Finley in New South Wales , Merredin in Western Australia and Heyfield in Victoria have all achieved more than 40 per cent house price growth over the past 12 months .
An end to these strong mining and agricultural conditions would slow down local economies that rely on them . For now however , the rapid recovery in global economic conditions suggests that this will not occur any time soon .
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