December 03, 2019
The Reserve Bank of Australia (RBA) has made the decision to hold the nation’s official cash rate at 0.75% today.
Chief Executive Officer of Mortgage Choice, Susan Mitchell said, “In the final monetary policy meeting for the year, the Reserve Bank board made the decision to hold the official cash rate, following a recent run of lacklustre economic data.
“In the minutes of the November monetary policy meeting, Reserve Bank board members agreed that a case could be made for further easing of monetary policy, however, a wait and see approach would allow them to monitor the effects of previous cash rate cuts.
“According to the Australian Bureau of Statistics, the unemployment rate rose throughout the month of October to 5.3% - a considerable way off the RBA’s target rate of 4.5%. Inflation rose 1.7% over the twelve months to September, well below the RBA’s target range of 2-3% and wage growth remain subdued, growing just 0.5% over the September quarter and 2.2% year on year.
“According to the Westpac Melbourne Institute of Consumer Sentiment, sentiment rose in November, following a sharp fall the month prior, when the RBA cut the cash rate. History shows that consumers do not respond well to cash rate cuts and given that we are approaching the Christmas sales period, it was reasonable to keep the cash rate on hold this month.
“The low interest rate environment, and short supply of housing stock, continue to stimulate the Australian property market. According to the latest CoreLogic Hedonic Home Value Index, national dwelling values recorded a fifth consecutive month of growth in the month of November - the largest monthly gain in sixteen years,” said Ms Mitchell.
“There is increasing speculation in the market that the RBA could lower the cash rate as low as 0.25% and adopt a Quantitative Easing program but Governor Lowe stressed recently that the threshold for undertaking QE in Australia is far off.
“While we cannot be certain of what policy makers have in store for the future, what we do know is that we can expect to see a sustained period of low interest rates for the foreseeable future. This is good news for Australians looking to enter the property market for the first time.
“Let’s face it, buying your first home can be an overwhelming experience but there’s no reason why you should have to go it alone when there are qualified professionals who can guide you along your journey. First time buyers who wish to put their home buying plans in action in 2020 should make an appointment to speak to their local mortgage broker to learn what they can do to be in a position to buy their first property.
“Your local mortgage broker will assess your financial situation and help you determine what your borrowing power is, help you apply for home loan pre-approval so that you can confidently shop around for a home or investment property and when the time comes, help you get all your paperwork together for your home loan application.
“As 2019 draws to a close, borrowers should take the time to assess their financial situation. For most of us, our home loan is our biggest financial commitment, so it’s important that you are getting a good deal. If you haven’t had your home loan reviewed in over 12 months, you should speak with your local mortgage broker. With three cuts to the cash rate this year alone, chances are you may be paying too much for your home loan,” concluded Ms Mitchell.