April cash rate: 6 tips to get into the market sooner

In its second meeting of the year, the Reserve Bank of Australia (RBA) has made the call to keep the cash rate on hold at 4.10%. A number of economic uncertainties - such as the US imposing tariffs and an upcoming federal election - played a role in the board’s wait-and-see approach.

Last time the board met, in February, it cut the cash rate by .25 percentage points - the first cut in over four years. It looks like this has given buyers confidence in the future direction of interest rates. 

Loan Market data shows an 8% increase in home loan applications in the four weeks after the February cash rate cut. There was also an increase of nearly 30% in pre-approvals from January to February. This combined with the Albanese government’s new initiatives to support first-home buyers has given momentum for those looking to get into the market. 

While another cash rate cut could further support affordability for first-home buyers, there are a number of ways they can get into the market sooner.

1. Talk to a broker

Talking to a mortgage broker to understand your borrowing capacity and securing a pre-approval should be the first step in your property journey. This helps you to form a strategy and narrow your property hunt.

2. Build a better credit score

A first step for first-time borrowers is to understand their credit score. A finance broker can suggest strategies to make improvements so they become more attractive to lenders. This could include paying off debt, eliminating additional credit and demonstrating genuine savings habits.

3. Consider a guarantor

Guarantors are common amongst first-home buyer applications, with parents using the equity they’ve generated in their family home to help their kids enter the market. This reduces the risk for the lender and can allow someone to purchase property with a lower deposit.

4. Rentvest

Rentvesting - where the first-home buyer owns property but rents elsewhere or lives with their parents - can be an effective way of entering the property market at a lower price point while living in an area they want to be in.

5. Check out regional incentives

State and territory governments have their own regional incentives for first-home buyers which include stamp duty exemptions. Knowing the thresholds for exemptions can save buyers several thousands of dollars.

6. Consider paying lenders mortgage insurance (LMI)

LMI is an additional cost on top of loan repayments, but it helps borrowers get into the market without having a 20% deposit. Depending on the area that the applicant is buying in, it may be better to pay LMI instead of waiting to secure the 20% deposit, as house prices may rise further.

If you’re looking to purchase property, speaking to a broker could help you devise a strategy that helps you get into the market sooner. Reach out to get started.