December 07, 2021
The Reserve Bank of Australia (RBA) has decided it will keep the nation’s official cash rate on hold at 0.10% at its December monetary policy meeting.
Speaking about the decision, CEO of Mortgage Choice and Smartline, Susan Mitchell said, “In its last monetary policy meeting for 2021, the Reserve Bank board decided to leave policy unchanged. The economy is on track as the year comes to a close, however it remains to be seen what challenges the new COVID-19 Omicron variant presents to the nation’s growth forecast. All eyes are now on the board’s first meeting in February 2022, when it is expected to announce the fate of its bond buying program.”
“While we continue to see the cash rate unchanged month after month, there has been a lot of movement in home loan interest rates, particularly increases in fixed interest rates. We’re seeing borrowers react to these changes in pricing by steering away from locking-in their home loan interest rates. Mortgage Choice home loan approval data shows that in the month of November, 37% of borrowers chose to fix part or all of their mortgage, compared with 41% in October and 43% the month prior,“ said Ms Mitchell.
Speaking about the changes in interest rates, realestate.com.au economist, Paul Ryan said “Fixed rates have increased for a couple of reasons. First, expectations for interest rate rises have increased, and second, the RBAs term funding facility that provided cheap funding has wound up. So fixed rates, particularly for longer than three years, have been increasing and are likely to continue to do so. But competition for variable rate loans continues to be strong, particularly for owner-occupiers, and these rates are continuing to fall.”
Ms Mitchell said, “As we enter the summer holiday break, this is traditionally a time many would-be homeowners and homeowners reflect on and review their housing needs for the year ahead. The good news is that access to historically low interest rates continues, however, affordability constraints remain the biggest barrier to entry for many, especially first time buyers.
“The New Year is a great time to review your services and subscriptions. For most households, the home loan is by far the biggest expense so I encourage all borrowers to meet with their local mortgage broker to review their home loan and ensure they’re still getting a good deal,” concluded Ms Mitchell.