As predicted, the RBA announced today that interest rates will stay at 0.75% for the rest of this decade. Despite, or perhaps because of, the 3 recent rate cuts, the RBA will wait and see how the economy is shaping up as we enter into a new year and new decade in January.
Today’s announcement again spoke to the potential for a ‘gentle turning point’ in the economy but also noted that risks are ‘tilted to the downside’. The unemployment rate is steady at just over 5% and wages growth is stagnant, however inflation is predicted to improve, albeit slowly.
The bright point in the market is the turnaround in established housing markets. This is particular true in Sydney and Melbourne where prices saw healthy increases in the second half of this year. Investment in new dwellings remains somewhat subdued despite record low interest rates. The RBA notes that there is strong competition for borrowers of high credit quality and so the hope is that low interest rates will spark more investment activity.
Low interest rates are also boosting the level of disposable household income, which the RBA hopes will boost household spending over the Christmas season.
It’s clear from today’s announcement that low interest rates are here to stay for quite a while, or in RBA words for an ‘extended period’. This means it’s a good time for people to review their investment portfolio to take advantage of the low cost of borrowing. As the RBA noted, there’s strong competition among the banks for borrowers of high quality credit. Mortgage-holders can make big savings by reviewing their mortgages and making sure their lender is passing on low rates. We can help you review your mortgage to make sure you’re getting the very best deal for you. First-home buyers can also take advantage of low rates and bank competition to get that all important first foot on the property ladder. Contact us today to find out how we can help.
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!