The thought of selling your home because of financial hardship is heartbreaking, and while it’s always preferable to hold property, particularly in the midst of a recession, for some COVID-hit home owners, the decision to sell in the current market conditions could prevent long-term pain.
Australian Banking Association announced six-month mortgage holidays to assist property owners that were unable to make mortgage repayments because of job losses during COVID-19. As the loan deferral period nears its end, lenders are encouraging borrowers to restart repayments, if they can. For those still struggling, the mortgage holiday period has been extended by a further four months to January 2021.
Australia officially enters its first recession in almost three decades as a result of the health crisis, further job losses are expected with some industries expected to take years to recover. That means a loan holiday for some mortgage holders is only putting off the inevitable.
Unemployment reached 5.1% in February this year before the pandemic hit, and it’s now sitting at 7.4% with predictions it could hit 10% by Christmas.
Top 3 reasons why selling now is a good choice!
1. Competition
One of the main reasons that COVID-hit mortgage holders should consider selling now is the fact that the supply of new listings coming onto the market is very low, and not just in Victoria where stage four lockdowns have hampered the property market.
2. High Demand
Another reason why homeowners in financial hardship should consider listing their properties for sale now is that demand for property is at record-highs.
3. Record low interest rates
Finally, a key contributor to the increase in interest for properties currently is the record low cash rate. According to the latest Reserve Bank of Australia data, the new three-year fixed rate mortgage rates average is 2.3%, the lowest they have ever been.
The RBA has stated that it will not increase official interest rates until such time as progress is made towards full employment and it is confident that inflation will be sustainably within the 2% to 3% target band. While the cash rate may not increase for a number of years, there is nothing to say that banks will not independently increase mortgage rates.
