The Reserve Bank of Australia (RBA) has today made the decision to keep the nation’s official cash rate on hold at 1.50%, however a shifting regulatory and economic environment could put pressure on the cost and availability of credit.
A combination of economic factors both domestically and abroad may be supporting the RBA’s decision to keep the cash rate on hold since August 2016.
Domestic conditions remain largely unchanged since the RBA board’s September cash rate decision.
The latest Westpac Melbourne Institute Index of Consumer Sentiment revealed that the consumer mood deteriorated in August however remains in positive territory overall. Further, National Australia Bank’s Business Survey found that business confidence fell in August and business conditions rebounded from the month prior. The Australian Bureau of Statistics’ Labour Force data revealed that the unemployment rate is 5.3% in August.
Encouragingly, recent data paints a rosy picture for the state of the Australian economy. Last week, Treasurer Josh Frydenberg revealed the smallest budget deficit in a decade in the 2017/2018 budget outcome and the June quarter GDP report revealed that the economy grew at the fastest annual rate since September 2012.
International conditions also play a key part in the RBA’s monetary policy decisions. Last week, the United States central bank decided to raise their federal funds rate marking the first time the benchmark has been above 2% since 2008. This decision could have a range of implications on the Australian economy, namely, an increase to wholesale funding costs which have been the driving force behind recent rate hikes on variable home loans.
These factors combined could put further upwards pressure on home loan interest rates. This, coupled with an increasingly complex loan application process means it has never been more important for to ensure you are in a financially healthy position and highlights the need for expert advice when applying for a home loan.
A qualified mortgage broker is across the ever-evolving lending landscape. A broker will assess your financial situation in order to determine how you can be in the best financial shape before submitting your loan application, and if necessary, coach you through any changes you need to make in the short and medium term to ensure a seamless application process when you are ready to buy.