The cup that stops a nation didn’t stop the RBA from meeting today to once again decide to keep the official cash rate on hold at 1.5%.
We may be beginning to wonder why the RBA bother to meet with the outcome pretty much a foregone conclusion. In fact it has now been a staggering 26 months since they last changed the rate.
However, as we’ve mentioned before the RBA are a bit stuck (some may say between a rock and a hard place). Low interest rates are supporting the economy to grow, but it’s taking longer than anyone anticipated.
There is movement at the station though. In the last quarter, house prices have started to fall in what the RBA sees as a welcome orderly manner. This is mostly due to a tightening in lending conditions from the major banks. It is good news particularly for those looking to enter the market for the first time. Stabilising prices give first-home buyers a chance to build up a better deposit and get that all-important foot on the first rung of home ownership. In fact, the long-term picture is solid. Population growth will keep demand for housing high and interest rates are still at historic lows, and are likely to remain so for the foreseeable future.
The other factors keeping RBA’s foot on the interest rate brake are the high levels of household debt and the slow-to-improve inflation and employment rates. This trifecta of economic factors mean RBA will stay the course at 1.5%.
RBA Governor, Phillip Lowe said in his announcement today that while credit conditions have tightened in recent months, mortgage rates remain low and there is strong competition for borrowers with a high credit rating.
Talk to us today to make sure you are ready to take advantage of market conditions. With all the major banks raising their rates, it pays to do your research. We can help ensure you are getting the best deal for you – even if that means changing your bank. Shopping around now can have enormous benefits in the long term.
Marc has been a professional lender for 28 years. After beginning his career in 1990 with a UK Building Society, he moved to Australia where he held several different retail banking roles. In 1999 it became clear to him that a mortgage broker would eventually become an obvious choice for someone looking for a home loan so he took the plunge and became an independent broker. He hasn’t looked back since!