Today at it’s regular monthly Board Meeting the RBA elected to keep the Cash Rate on hold at 1.50%. It is now one year since the RBA last moved on rates when it dropped the cash rate to it’s current level in August 2016.

Posted in: Insights, News

01/08/2017

Today at it’s regular monthly Board Meeting the RBA elected to keep the Cash Rate on hold at 1.50%.   It is now one year since the RBA last moved on rates when it dropped the cash rate to it’s current level in August 2016.

The economy overall is showing some signs of recovery in certain areas, particularly business investment and reducing unemployment, however there are also some indicators that remain a cause for concern.   Primarily these areas are high levels of household debt which is very sensitive to increasing interest rates, as well as our stubbornly strong Aussie Dollar which again today broke through the USD 80 cent barrier for the second time in two weeks.   The RBA has stated many times that it would prefer to see our dollar at a much lower level to assist our export markets and start to bring our balance of payments back into line.

Out of cycle interest rate increases, particularly for investors and those with interest only loans in response to APRA guidelines imposed on the Banks are effectively doing part of the job for the RBA with respect to taking the heat out of the property markets in our two largest capitals, Sydney and Melbourne.

There remains an overall expectation that the RBA will keep the Cash Rate at it’s current levels well into 2018, and possibly beyond.   For home owners with owner occupied loans this will be welcome news.   There remains a lot of competition amongst Lenders in the owner occupied lending space with some very sharply priced products on the market at present, many of which have an interest rate that starts with a 3.

Certainly, anyone with an owner occupied home loan who hasn’t reviewed their loan in the last couple of years should definitely be taking the time to review the market to see if they can get a better deal and save money.   A quick discussion with a Bernie Lewis Mortgage Adviser could show you how to save many thousands of dollars.