Home' InDaily : September 10th 2010 Contents Auction action
An enormous, architecturally designed
home inspired by Georgian themes in the
popular location of 52a Dutton Terrace in
Medindie was last week's highest seller
after a winning bid of $1,800,000.
A symmetrical bluestone cottage at 5
Owen Street, Goodwood, which was built
in the late 1800s attracted the second best
bid of $1,200,000.
The third highest selling price last
week was still above the million dollar
mark. Located a little further out of the
city at 12 Nioka Drive in Ironbank, the
renovated 1950s glass and stone home
sold for $1,150,000. Fourth best seller
was a four-bedroom home at 18 Mingara
Avenue in Stonyfell which changed
ownership for the price of $901,000.
Twenty-three properties presented
for sale this week, none of those were
withdrawn and 17 sold.
52a Dutton Terrace, Medindie $1,800,000
5 Owen Street, Goodwood $1,200,000
12 Nioka Drive, Ironbank $1,150,000
18 Mingara Avenue, Stonyfell $901,000
3a Park Road, Kensington Park $886,000
17 Lily Street, Goodwood $640,000 52a Dutton Terrace, Medindie -- sold for $1,800,000
12 Nioka Drive, Ironbank -- sold for $1,150,000
5 Owen Street, Goodwood -- sold for $1,200,000
Fixed rates set to become more popular
The number of borrowers taking
out fixed rate home loans is set to
increase as fixed rates once again
start proving more popular.
The global financial crisis triggered
a structural shift in the traditional
differentials between fixed home loan
rates and variable home loan rates, but
over the past few months it has reverted
back towards the traditional patterns
evident prior to 2007.
Put simply, three-year fixed home loan
rates have been dropping substantially
in the past few months while standard
variable rates have been steady.
This has put the three-year fixed rate
at a comfortable level below the standard
variable rate and means that borrowers
examining their home loan options are
increasingly likely to consider fixed rates
as an option.
Individuals should closely assess
their own circumstances before making a
decision. The volatility over the past three
years in global financial markets has been
unprecedented and so trying to predict
the future direction of interest rates is a
In September, 2008 the official cash
rate set by the RBA was sitting at 7.25
per cent. It tumbled to a 40-year low of
3.0 per cent in just seven months as the
RBA battled to withstand the worst of
the impacts of the global financial crisis.
Once the danger had passed, rates slowly
moved back up again to where they
are now at close to long-run historical
averages for Australia.
One of the options for homebuyers
can be to opt for a portion of their loan to
be fixed, with the rest at a variable rate.
This can bring the best of both worlds;
the certainty of knowing how much
repayments will be, while the variable
portion offers more flexibility.
The average packaged three-year fixed
home loan rate currently sits at 6.99 per
cent, compared with a standard variable
rate of 7.43 per cent.
This gap is around the same size as
it was before 2007 before the global
financial crisis up-ended many of the old
rules of thumb.
From the mid-1990s to 2007, fixed
rate home loans consistently represented
around 30 per cent of all new home loans
taken out. That fell to tiny levels as variable
rates tumbled from late 2008 onwards.
Buyers were attracted by the certainty
which a fixed rate represented for people
who wanted to know exactly how much
they would need to allocate to home loan
repayments, plus the cheaper repayments
on offer with fixed rates lower than
Fixed rates are influenced more by the
cost of money being sourced by banks in
domestic or offshore money markets, than
by the level of official cash rates set by
the Reserve Bank of Australia.
So while those with variable rate
home loans eagerly watch the outcome
of the monthly meetings held by the
RBA, homebuyers who lock in a fixed
rate for a certain period know what their
repayments will be for that duration.
Chris Ward is BankSA general manager
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