Whilst the world’s leading athletes are off to the home of ‘Zumba’ this week to put each other to the test, “team RBA” has come out blazing today with its own ridiculous record reducing our official cash rate by 0.25% to a record low of 1.50%!
The Commonwealth Bank was the first to move after the announcement, reducing its standard variable rate mortgages by 0.13%, taking the rate for owner occupiers to a record low 5.22% for the bank. Investor loans fell to 5.49%. NAB followed next, announcing it will only be passing on 10 basis points to its customers. This takes NAB’s standard variable rate for home loans to 5.25% per cent.
We’d like to think that the RBA governor Glenn Stevens and his ‘dream team’ got into the Olympic spirit to review the Australian economy (and most importantly our national interest rate settings) in either full Mardi Gras (or at least a pair of Aussie speedos with maraca in hand!), but we believe that’s highly unlikely.
In their official statement, the RBA stated “that overall growth is continuing at a moderate pace, despite a very large decline in business investment”, and went on to acknowledge that “labour market indicators continue to be somewhat mixed, but are consistent with a modest pace of expansion in employment in the near term”. Overall the outlook was things are ok, but not exactly awesome.
“Growth in lending for housing purposes has slowed a little this year. All this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished”. The RBA also noted “that dwelling prices have been rising only moderately over the course of this year, with considerable supply of apartments scheduled to come on stream over the next couple of years, particularly in the eastern capital cities.”.
Never before has Australia had such a low cash rate and you can certainly expect some crazy activity from property investors, home owners and more importantly the banks and other financial institutions as competition across the board heats up! Given the Russian Olympic team is mostly out of the Olympics now, we might even see some of them popping up as foreign buyers over here. You never know, and if you are reading this Mr Putin, check out our 8 things to look for when picking your next investment property.
The central bank last moved on rates back 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. It was anticipated that a further rate cut could occur and the August 2016 RBA Meeting has certainly delivered. Remember though, when compared to other central banks around the globe, our rates are still much higher. Canada, the UK and the US currently sit at 0.5% and are slowly working their way up.
If you already have a home loan, please remember that when rates are on the move, it’s always wise to revisit what your current rates are to ensure you’re still getting the best deal available for your needs. Here’s why. Whilst we don’t like to toot our own horn, we always go in hard on negotiating better than advertised interest rates. We also have some pretty good “street cred” with the banks/lenders which often afford us better discounts than the average broker or bank manager. Yep, as the saying goes, it can come down to who you know!
So, if you are looking to buy, refinance, fix your interest rate or invest in property, Loop in with our expert team and we’ll find the most competitive product for your needs. Get in touch with us now through one of the methods below: