RBA Rates Announcement February 2019

New year, new you? Well not for the RBA.  In their first meeting of the board for 2019,
the RBA decided to keep the official cash rate steady at 1.5%. It may be
beginning to sound a bit like a broken record, but actually today’s
announcement was noticeably different in tone.

Overall the message was upbeat. The RBA repeated its line
that “low level of interest rates is continuing to support the Australian
economy” but emphasised that getting the inflation rate to its target of 2-3%
is likely to be a gradual process.

So gradual in fact, some economists are now suggesting that
the RBA may consider dropping the official cash rate to as low as 1% by the end
of 2019. Whatever the case, it is clear that the official interest rate is not
going up any time soon. Recent falls in property values and in new building
approvals have also helped to take the steam out of the market.

So what does this mean? The fact remains that interest rates
are at historic lows and so the cost of borrowing is relatively cheap. This
means that it is a good time to invest in property especially for the medium to
long term. As the RBA noted today “mortgage rates remain low and there is
strong competition for borrowers of high credit quality”. It’s a great time for
first-home buyers with good deposits and property investors to advantage of the
low rates and the current buyers market to expand their property portfolio.

It’s not all good news though. Recently, we have seen a lot
of banks (both major and minor) raise mortgage interest rates out of cycle with
the RBA. This is mainly due to a rise in the cost of wholesale borrowing. Many
customers are finding that their variable rates are creeping upwards. Given
that there is strong completion for borrowers, it is a great time to review
your loan. If you are paying above 4.1%, it is definitely worth investigating
your options. Proactive investors will make the most of the opportunities in
the current market, and keeping an eye on your interest rates is a good idea.
Don’t be afraid to shop around for a better deal.

Contact us for a home loan
health check today. We’ll make sure you are getting the best deal
for you.