Following last month’s rate cut, the Reserve Bank of Australia has decided to keep the cash rate on hold for September. This leaves the cash rate at 1.50% and interest rates on a number of home loans well below 4%.
This decision is in keeping with the Board’s typical behaviour of entering into a holding pattern following a rate cut. The Board will continue to monitor the economy over the coming months in order to assess the effectiveness of its August decision.
This month’s Reserve Bank meeting was the last for Governor Glenn Stevens, who has been the head of the Reserve Bank since 2006. His statement showed a mixed economic outlook, but overall pointed to signs of growth, particularly within our domestic market. Here’s a brief summary.
Positive economic signs
- Improvement in several advanced economies this year
- Overall growth is continuing, particularly in domestic demand and exports
- Low interest rates are supporting domestic spending
- Housing prices are rising moderately
Weak economic factors
- China’s market is slowing
- Inflation will likely remain low for quite some time
- There has been a recent decline in business investment
After last month’s rate cut, the Brisbane property market bounced back, recording one of the busiest August months in many years. Data from the Westpac Melbourne Consumer Sentiment Index also shows that confidence was up 2% in August.
While very few lenders passed on the full rate cut from August, the cost of borrowing is still more affordable than ever. Stricter lending standards imposed last year also mean that banks and other lenders are very competitive right now, which means you may be able to find a better deal by refinancing.
The next set of inflation figures won’t be released until late October, so it’s unlikely we will see any movements to the cash rate at next month’s meeting – although economists are not ruling out the possibility of another rate cut this year.
The latest Brisbane property market stats
- Official cash rate: 1.50%
- Brisbane median house sale price: $658,000*
- Brisbane median unit sale price: $467,500*
- Auction clearance rate: 55%
- Interest rates starting from 3.64% p.a.
*These are the latest CoreLogic RP Data figures from July, 2016. They are based on data from the Brisbane City Council region only.
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