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What Does The Record Low Interest Rates Mean for Us?

Government Policies


Interest rates are at a record low of 0.25% and the central bank has injected a huge amount of cash, approximately $35 billion of government bonds, into the Australian economy in order to ease job loss burdens (Hall, 2020). Morrison announced rent relief packages, legally requiring commercial landlords to reduce a proportion of the lease/rental agreement depending on businesses who meet the requirements. However, it is uncertain what will happen with residential tenancies - while tenants are still expected to pay their full rent there has been an ‘eviction ban’ for those who have lost their income/job from the coronavirus pandemic (ABC, 2020).





Industry


Banks are postponing mortgage payments during the Coronavirus pandemic. The Big Four (Commonwealth, Westpac, NAB and ANZ) are all allowing deferred loan payments but also announced interest capitalisation (ABC, 2020). As a result of the pandemic, there could be a positive shift towards suburban living, with people moving to areas less densely populated. Mr Ciemitis mentions that although people enjoy the ease of service/product availability in urban life from the pandemic, people who are stuck in apartments could begin to desire areas that emphasise parks and outdoor recreation (ABC, 2020). Property prices could fall as low as 30% especially in cities like Sydney and Melbourne, depending on the developments of the COVID-19 restrictions. If the ban on auctions and open houses are lifted by the end of April then the housing market could easily bounce back, however if it continues until the end of June the fall in the housing market may not recover till December (Brewster, 2020).


Adapting to Online Services


Vast Capital is not the only company to start adapting towards a digital process for consumers. We continue to provide a seamless mortgage solution, now attainable through our free 1:1 online loan enquiry service which can be booked directly on the Vast Capital Website. This is the solution to getting mortgage solutions from anywhere, even from home. The surging popularity of teleconferencing services such as Zoom and Skype for work and projects has opened new channels for companies to interact with consumers, for example restaurants and grocery shops primarily use food delivery services such as Uber Eats and Deliveroo to maintain their businesses. All these developments will likely cause a significant shift in consumer behaviour and further growth/demand for videoconferencing. Online channels will become the norm and will supplement the traditional channels to deliver products and services. After the pandemic the economy will return towards the original equilibrium, but a growing number of businesses will adapt an omni-channel approach to goods and services distribution (ABC, 2020).

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