The RBA has just announced it’s second rate cut in a row, bringing the cash rate down to a historic low of 1 per cent.
Last month RBA governor Philip Lowe hinted at another rate cut, commented that it was “unrealistic to expect that lowering interest rates by quarter of a percentage point will materially shift the path we look to be on”. Indicating that a further cut was required in order to boost inflation, promote growth in wages and boost the economy to the desired level.
Dropping the RBA’s official cash rate to 1 per cent will lead on to a drop in interest rates on many variable home loans to 3.5 per cent or lower. Compare that to interest rates of 7.5 per cent 11 years ago. The longer interest rates stay at these lower levels the harder it will be for the RBA to increase them – and keep the economy on a positive path. Households have become used to these lower level interest rates and if they were to rise again significantly homeowners would have to immediately stop spending which would lower inflation.
Whilst frustrating for retirees and savers, these low interest rates are here to stay for a while – and it’s good news for home loan customers.
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By Wendy Chamberlain
Copyright 2019 | All Rights Reserved
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With a passion for all things real estate spanning over 20 years, Wendy loves that her role as a Buyers Agent and Sellers Advocate gives her buying and selling clients an experienced voice they can trust when it comes to negotiating to buy or sell something as important as their home or investment. Wendy considers it a privilege to be asked to help others realise such an important goal as home ownership and to be trusted with that honour. Get in touch today via www.wendychamberlain.com.au for a no obligation chat about how Wendy can work with you and help you save time and money to secure your new home sooner.