Ready for a steady cash rate?
Shopping around could help borrowers find rate relief
In a move that will likely disappoint home loan borrowers who had factored in a third consecutive rate cut, the Reserve Bank of Australia today decided to keep the cash rate steady at 4.25%.
Mortgage Choice spokesperson Belinda Williamson said, “Today’s decision by the Reserve Bank to keep rates steady may come as a disappointment to many borrowers who had budgeted for a rate drop this month, but it speaks positively of our overall domestic economic position.”
“The Bank is keeping a close watch on economic indicators and if we see any significant setbacks in the coming months, it is possible the rate cut debate may return. For now, the situation is certainly looking more optimistic than it has been in recent months.
“For variable rate borrowers who were anticipating a rate cut, all is not lost. Reviewing their home loan and lender could unearth a product that better suits their needs and has a more attractive interest rate, fewer fees, and/or offers loan features that can help them make a larger dent in their debt. Features may include an offset account, the ability to make higher or more frequent repayments, etc.
“The decision today to keep rates steady is also reassuring for many borrowers who recently took out a fixed rate loan and locked in their interest rate for a set period. Our January home loan approval data showed more than one in every five new borrowers chose a fixed rate loan.
“There is a strong possibility that a stable interest rate climate may also encourage buyers to enter the property market based on a degree of certainty around the direction of the economy and hence their ability to repay a loan.
“There are many positive factors at play for those looking to buy. Lenders’ variable and fixed rates have been falling over recent months, property prices are down in many areas, the rental vacancy rate is low in most capital cities and rental costs are up, making home ownership more attractive.”