Welcome to this week's edition of Eagle Eye Insight! In this issue, we’re diving into some key property investment topics, including lender diversification, the Reserve Bank's upcoming decisions, and the latest market trends affecting rental properties.
Are you currently only using one lender for your rental property borrowing and looking to grow your portfolio? Using more than one lender or “split banking” may be worthwhile exploring. Whilst it does add another layer of complexity, it can have some advantages. It can provide more lending options if one bank says no, and by not having all your properties cross-collateralised with one lender, you may be able to keep some of the proceeds from a property sale.
The first Reserve Bank's official cash rate (OCR) announcement for 2025 is looming. It raises a few questions: Will the momentum of cuts from 2024 continue? Are any cuts already priced into current interest rates? What will the commentary be around future cuts, and where does the Reserve Bank see the bottom of the interest rate cycle? Watch this space!
We currently have a couple of rental property vacancies, so I reached out to my property manager to gauge the level of demand from tenants to rent properties. I was surprised to find out our rental property company had 20 active listings for rent, including a property belonging to a friend of ours. So, what’s causing this? Asking rents could be too high. There may be properties being vacated by tenants buying their first home. There may be a shortage of skilled labour entering the country. I think all of the above. At the end of the day, basic supply and demand economics tells us rents may have to be reduced to find the right tenant.
Note: The above comments are for general information purposes only and do not constitute financial advice. We recommend consulting a registered financial advisor when considering your mortgage options.