February 01, 2011
Australia's largest independently-owned mortgage broker, Mortgage Choice is delighted the Reserve Bank concluded its first cash rate meeting of 2011 on a positive note for many mortgage holders.
The official interest rate will remain steady at 4.75% for another month. Hopefully lenders follow suit.
Today's decision was most likely prompted by the last two quarters of consumer price index figures showing weaker than expected inflationary pressures, the housing market's continued subdued nature and uncertainty over the economic impact of the floods.
Mortgage Choice spokesperson Kristy Sheppard said, "This result is a blessing for those who are still adjusting to a new household budget after the November rate rise and 'silly season' spending. It will please all borrowers who are repaying debt at a variable interest rate."
"Lender interest rates are now above what the Reserve Bank sees as neutral so it would need a good reason to raise the cash rate again so soon. Despite low unemployment and an imminent resources boom, there's not yet enough reason to put further pressure on consumer and business consumption, especially given the unknown inflationary effect of recent flooding.
"However, economists are saying it still looks likely we'll see at least one or two rate rises this year, so borrowers should prepare now by adding a little more to each mortgage repayment. If we don't see any rate rises that's terrific - they've given their mortgage some leg room while reducing the loan term and interest owed."
Fact: If someone with a 30-year $300,000 principle and interest home loan at 7% began paying $50 extra per week three years into their loan (and interest rates didn't move at all) they would save just under $96,000 in interest plus six years and three months off their loan term.
Call Mortgage Choice on 13 MORTGAGE.
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