Cash Rate Stays The Same But Are More Cuts Coming?
Welcome to our quarterly review of interest rates, lending conditions, finance and the latest info on what’s happening with mainstream banks and non-bank lenders throughout Australia.
Our specific interest rate review will enable you to make the right decision when it comes to purchasing a home, investment property or refinancing.
This information could literally save you thousands of dollars!
RBA cash rate holds
Last Tuesday (6th August) RBA has decided to keep the official cash rate on hold at 1%.
The cash rate remains at its lowest level in Australian history.
The RBA’s recent decisions have prompted plenty of movement in interest rates amongst the lenders. Some have passed on sizeable reductions in variable rates, while others have been slammed for not passing on the full rate cuts.
Variable mortgage rates have dropped to an all-time low, with the market continuing to take shape following the RBA’s monetary policy adjustments.
A new analysis from rate comparison site Canstar has provided a snapshot into the mortgage rate environment following the Reserve Bank of Australia’s (RBA) recent monetary policy adjustments, which had the cash rate fell to a record low of just 1%.
The central bank states that the primary motivation behind the cuts was to stimulate the labour market, with the RBA’s Monetary Policy Board claiming that lower interest rates would help support the necessary growth in employment.
Are interest rates actually dropping
The cuts garnered an immediate response from the mortgage market, with most lenders passing on the reductions, either partially or in full.
Canstar’s analysis found that as a result of the cuts, the average variable owner-occupied Principal and Interest mortgage rate has now dropped to 4.05%.
Although this is accurate, many non-bank lenders have interest rates in the low 3’s.
It is wise to shop your mortgage and find the best rate with the right facilities for your particular circumstances.
This is where your Mortgage Broker comes into their own.
Canstar also found that the average Investment Interest Only loan has dropped to 4.76%. Again, whilst this is accurate, we have lenders offering high 3’s in this arena.
It makes sense to contact your Mortgage Broker today, as unlike the banks, Brokers will always have YOUR best interests at heart (pun intended).
Mortgage rates may not have hit their floor for 2019 with at least one more cash rate adjustment expected before the end of the year.
In minutes released following the central bank’s last monetary policy decision, the RBA noted it is prepared to adjust interest rates again if needed to get closer to full employment and achieve inflation targets.
What should you do?
A savvy mortgage owner will keep their loan repayments the same, regardless of the reduction in rates. Using this simple as strategy, find out how you get to own your home sooner and get rid of that mortgage altogether.
Better still, with the right facility in place, you make sure your money works for you and minimise the amount of interest the banks can charge you anyway.
Others have done it already, and so can you.
Contact us if you would like advice or help with finance, lending, refinance or personal wealth growth strategy