Prospective first home buyers have been thrown several bones this week, but I think everyone should keep their financial focus.
The big banks of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB) received a boost this week after the Liberals won the Federal Election.
Both APRA and the RBA would like first home buyers to get into the housing market and have indicated some important potential changes.
Today APRA has said that it may no longer expect banks to measure a borrower's capability to repay the loan if the interest rate was at 7%, instead it may ask them to consider if a borrower can repay the loan at an interest rate that is 2.5% higher than what they pay.
The RBA is expected to decrease interest rates next month to give the economy and homeowners a boost.
When you couple the above two moves with the fact that the government may help pay the lenders' mortgage insurance from January 2020 you can see that the housing market may get a short-term boost.
But if you're looking to buy a home I don't think you should rush into anything.
A mortgage is sometimes a 30-year project to pay off. Interest rates may be low this year, lower in 2020 or even for the next few years. But they may not always be so low. In a decade from now, interest rates could be 4% or 5% higher.
It is very unlikely that boom times for the Australian housing market are going to return any time soon, so don't feel like you're going to miss out if you don't jump in the next month. It's more important to set up your finances correctly for when you do own a home.
Foolish takeaway
If you don't have a 20% deposit then you could signing up for too much interest if you get a loan too early. Owning a home is very expensive – the added council rates, water rates, building insurance and perhaps body corp fees add a lot to household expenditure, you don't want to be up to your neck in loan repayments as well.
