Cash rate on hold but borrowers still chasing deals

The Reserve Bank of Australia (RBA) has announced it will keep the nation’s official cash rate on hold at 0.10% at its July monetary policy meeting.

July 06, 2021

The Reserve Bank of Australia (RBA) has announced it will keep the nation’s official cash rate on hold at 0.10% at its July monetary policy meeting.

Mortgage Choice CEO Susan Mitchell said, “Today’s highly anticipated board meeting saw the Reserve Bank Board retain the April 2024 bond as the yield target, retain the target of 10 basis points, and continue purchasing government bonds at the rate of $4 billion a week until at least mid November. These measures will continue to support the economy from the recovery stage to expansion.”

“Despite no changes to the cash rate, Mortgage Choice monthly home loan approval data shows borrowers are still on the hunt for a better deal. We have seen strong demand for refinance, with demand trending up since December. Nearly 40% of loans approved in June were for the purpose of refinance. While this isn’t as strong as the COVID high of over 48% in April 2020, it shows that Australians continue to take advantage of the extremely competitive home loan market.

“Our customers are seeking certainty by locking in part or all of their home loan interest rate. Mortgage Choice monthly application data shows that demand for fixed rates remained strong in June after reaching a 5-year high in May with over 42% of home loan applications having a fixed component.

“There are a number of lenders on our panel with attractive cash back offers in market and home loan interest rates remain low across the board, making now a great time to speak to a broker to learn if there’s a better deal.

“The low interest rate environment continues to support strong activity in the nation’s housing market. The latest housing finance data from the Australian Bureau of Statistics revealed that loan commitments soared in May, supported by a jump in the value of investor approvals. There was a decline in the value of loans to first home buyers which is unsurprising given the growth in dwelling values over the year,” said Ms Mitchell.

CoreLogic’s Hedonic Home Value Index revealed national dwelling values rose 1.9% in June, supported by strong consumer demand and low supply, however the rate of growth is slowing across the nation’s capital cities.

Ms Mitchell said “the latest lockdown measures are a sobering reminder that the pandemic is not over, reinforcing the need for ongoing fiscal and monetary support. There's no question that the latest lockdowns will dampen economic activity, however it remains to be seen what impact they will have on the nation’s housing market.” 

“While the cash rate is expected to stay low for the foreseeable future, the nation’s strong jobs market and wider economic recovery could put pressure on the RBA to raise the cash rate sooner than forecast. 

“My advice to borrowers as always is to ensure they are prepared for any eventual rate rises by ensuring they’re at the lowest rate they can access. Don’t be complacent, your local mortgage broker can negotiate a better deal with your bank or help you refinance with a new lender,” concluded Ms Mitchell.

Important information
This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the advice, consider its appropriateness to your circumstances.

About Mortgage Choice
Mortgage Choice seeks to help Australians with all of their financial needs. Established in 1992, Mortgage Choice was originally established to help Australians improve their financial situation by offering a choice of home loan providers, coupled with the expert advice of a mortgage professional. Since that time, the company has grown and developed into a fully-fledged financial services provider. Today, Mortgage Choice helps customers source car loans, personal loans, credit cards, commercial loans, asset finance, deposit bonds, and risk and general insurance. Further, the company offers Australians access to real, relevant and affordable financial advice through our qualified financial advisers. Mortgage Choice is a wholly owned subsidiary of REA Group and is a member of the Mortgage & Finance Association of Australia (MFAA). Mortgage Choice holds an Australian Credit Licence: no. 382869 and FinChoice Pty Limited holds an Australian Financial Services Licence: no. 422854. Both licences are issued by ASIC. Visit www.mortgagechoice.com.au or call customer service on 13 77 62.


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