Today the Reserve Bank of Australia met and decided to go all Braveheart and hold the official cash rate at the record low of 1.75%.
The central bank last moved in May 2016, with a 0.25% cut which was well received by both existing home owners and property investors, as well as those looking to get into the market for the first time. There is even speculation that the rate could be cut even more over the coming year.
In their statement, the RBA stated “overall growth is continuing, despite a very large decline in business investment”, and went on to acknowledge that “Dwelling prices have begun to rise again recently”. Overall the outlook was positive. Those with existing mortgages have had a lot to say already on social media, with the most common response being: “They can take our repayments, but they’ll never take our FREEEDDDOOOMMMM!”.
Back to the RBA: “Indications are that the effects of supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments”. The RBA also noted that a “considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities”. We’ll share our thoughts on this soon.
The RBA last decided to react in response to low inflation figures and a strengthening Aussie dollar it took many official forecasters and economist by surprise! Many now predicting another cut in the immediate future is highly unlikely, with the RBA likely to reserve this option in case it feels the economy requires further stimulation moving forward. Check out our article explaining inflation and how it affects your back pocket.
What does this actually mean to you? OR What does this actually mean to the average home owner or property investor in terms of cash? Interest rates are low which is a great thing, but pressure from lenders (tightening their credit policies – cheers APRA) has seen some first home buyers and property investors falling over at the last hurdle of securing their finance.
After the last rate cut most lenders have moved to pass it on in full (some only part), particularly on variable interest rate products for owner-occupier purposes. We are however seeing movement and competition in the investment loans area too. Lots of competition and record low rates are creating a dynamic and competitive environment.
Overall, it’s never been a better time to secure finance here in Australia.
With property markets performing well, there is plenty of housing stock available to buyers combined with seeing rate cuts across other loan products.
We expect lower interest rates will stimulate the market even further, so talk to us about getting your finance in place now!
If you already have a home loan, please remember that when rates are on the move, it’s wise to revisit what your current rates are to ensure you’re still getting the best deal available for your needs. Book a session or get in touch.
If you are looking to refinance, fix your interest rate or invest, Loop in with us and we’ll find the most competitive product for your needs. Get in touch with us now through one of the methods below: