As expected the RBA, at it’s monthly Board Meeting earlier today, left the Cash Rate unchanged at it’s record low of 0.25%.
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Unlike some other countries who have reduced their cash rate to 0% or even lower, the RBA has indicated previously that 0.25% was as low as it was prepared to go. Instead, if further stimulus was required it would use other tools, other than interest rates, to attempt to stimulate the economy. These other tools, include the purchase of of Government Bonds and the provision of low cost funding to ADI’s (the Banks) for a three year period.
These, combined with other Government backed stimulus programs are designed to support the economy through the tough COVID-19 restriction period and the required recovery period after restrictions are eased.
For borrowers, this means that interest rates will remain very low for what will likely be a lengthy period. For those looking to borrow money to purchase a home, affordability and stability of required monthly repayments is likely to be better than prior to COVID-19.
Likewise, for those who already have a home loan, rates have reduced. However, not all Lenders have passed on the full amount of previous rate cuts, so some could still be paying a much higher interest rate than what otherwise might be available in the market.
Over the life of a loan, a higher rate than what might be available elsewhere can end up costing many thousands of dollars more in interest charges, so it pays to seek advice and shop around. Click here to speak with a Bernie Lewis Mortgage Broker today.