Why does the cash rate point you towards investing in property?

By Kevin Kelly

With the cash rate sitting so low, there is a real buzz around property investment. Bunbury could just be the perfect place for you to start the life of your dreams with your very own property.

But why does the cash rate make a difference?

Record lows point to property

The cash rate remaining unchanged at just 2 per cent is great news for anyone looking towards purchasing their own piece of real estate in Bunbury. The low cash rate affects the banks' interest rates and how much they will charge for a home loan, so keeping that number minimal makes accessing a mortgage much more simple.

Canstar research suggests that a home loan of $1million would require monthly repayments of over $7,500, based on an average 25 year loan repayment period. Lowering the cash rate by just 1 per cent could result in a decrease of more than $600 per month on your repayment scheme. The same works the other way however, as an increased cash rate means potentially higher monthly repayments.

Throughout 2008 the cash rate jumped in percentage significantly. It started at 7 per cent in February, then went up to 7.25 per cent for most of the year, but by December 2008 it had decreased to just 4.25 per cent. The advantages for home loan repayments in that situation are enormous.

When should you act?

Right now. Real estate in Bunbury East is thriving on the back of new developments, and with a low cash rate at the moment all of the arrows are pointing you towards investing and making the most of the governmental decision.

It's unlikely to reach the lofty heights of 17.5 per cent seen in 1990, but the cash rate could increase over the next few months. In terms of who to talk to, the experts are your best bet and Ray White Bunbury has a knowledgeable team that can help you into your dream piece of property.

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