A volatile year ahead for the property market with rates expected to change

Guest observation

With another result of 'no change' at the Reserve Bank cash rate meeting for December, it may seem like the property market is becoming a tedious 'waiting game', however recent analysis suggests many possible outcomes could surface in the few years ahead.

Of the 37 experts surveyed in Finder.com.au's December Reserve Bank Survey, 69% predicted that house prices would continue to rise throughout the New Year, despite most experts betting on the cash rate to rise.

Interestingly, just three experts were forecasting the cash to fall next year but since last week, six of the 37 have adjusted their predictions, also forecasting the cash rate is likely to take a tumble.

However, many are still expecting the cash rate to come back up to a new normal level of around 4%, so rates won't stay low for long, even with another rate cut.

For potential buyers, it makes sense to dive into property before they become more expensive, and it's also worth considering locking in a fixed interest rate if you're worried about the higher costs down the track.

Provided you've got a repayment strategy to suit, securing a property with an LVR (loan-to-value ratio) over 80% (so a deposit of less than 20% of the property value) could be feasible, given the forecasted property price hikes. However, the widening dialogue around rate movements can be confusing and even daunting, especially for those new to the market. With some five-year fixed rates on the market for less than 5%, securing a good deal until the rate argument settles could be a viable option for confused potential property owners.

Finder.com.au's lowest variable rates allowing 95% LVR:

1. IMB Introductory Variable Rate Home Loan: 4.66% p.a.
   
   This loan allows you to save interest in the first year by offering a discounted rate. You could either reserve these savings as a safety buffer, should interest rates move, or use them to curb the steep $767.74 combination of application and legal fees.
   
   
2. Pacific Mortgage Group Construction Home Loan: 4.72% p.a.
   
   Pacific Mortgage Group has very few fees, none of which are ongoing, so you can rest assured knowing that although you won't be stung with extras, especially if you're planning to borrow more than 80% LVR and capitalising lenders mortgage insurance (LMI) into your loan. However, if you plan to build using this loan, there are loading fees around the construction period of the loan which vary depending upon the constructions undertaken.

3. Aussie Optimiser Plus Variable Rate: 4.84% p.a. This loan also allows for a 100 percent offset account, so you'll have even more room to move as it is then possible to negate some of the interest charged on your loan.
   
   

Finder.com.au's lowest 5-year fixed rates:

1. UBank UHomeloan: 4.93% p.a.
   
   This is the lowest five-year fixed rate currently on Finder.com.au, and it has some restrictions including that you will be unable to make extra repayments or redraw funds from this account. If you can meet the strict guidelines, you've nailed a good deal that will shelter you from interest rate movements for the next five years.
   
   
2. Commonwealth Wealth Package: 4.99% p.a.
   
   This is one of the Commonwealth Bank's many home loans that can be taken out as part of its Wealth Package, which entails a discount on their advertised rates. However, this loan does have a limit on offset accounts per withdrawal and deposits. There's also a $375 annual package fee.
   
   
3. NAB National Choice Package: 4.99% p.a.
   
   The package fee is again probably the biggest additional consideration to this loan, as it sits at an annual cost of $395. With that being said, this loan allows redraws, extra repayments and an additional discount on the advertised rate. As long as you don't want this loan for construction purposes, it's a notable contender in the five-year fixed space.