For a record 20th time the Reserve Bank of Australia has announced the official cash rate will remain at 1.5%.

In August 2016 there was a 25 basis point cut to 1.5% and despite some predictions last year that rates would rise in 2018, financial markets are now not expecting a jump until the end of next year, by which time rates would have been on hold for more than three years – the entirety of Philip Lowe’s tenure as Governor of the Reserve Bank of Australia.

“The low level of interest rates is continuing to support the Australian economy,” the RBA statement said. “Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual.”

The record-low cash rate has resulted in standard variable mortgage rates for home owners remaining at their lowest level since 1965, averaging 5.2 per cent.

What does this mean for current and prospective property investors?

“Even if mortgage rates do rise, they are still well below the 20-year average of 6.8 per cent,” CoreLogic head of research Tim Lawless said.

For current home owners, the low interest rate environment is providing some relief to homeowners struggling with costs of living rising in other areas, particularly energy prices and school fees.

For prospective property investors, it’s well known that banks have tightened their lending criteria over the past year. However, with the right assistance from quality brokers and financial planners, we’re still seeing buyers successfully obtaining finance at very reasonable interest rates.

The ability to borrow within your means at low interest rates is allowing property buyers to take advantage of the current low property prices. When the property market inevitably returns to an upwards swing, those savvy investors who bought at the bottom of the market in areas experiencing significant infrastructure and population growth will undoubtedly see considerable capital growth and rental returns allowing them to use that equity to further grow their property portfolio.

 

2018-06-05T18:02:40+00:00 Uncategorized|