The streak of historically low interest rates continues with the Reserve Bank of Australia deciding to leave the cash rate on hold at 1.75% for June.
Given that low inflation has been a leading cause of concern for the Reserve Bank, there was some speculation that a second consecutive rate cut may have been on the cards this month. But last week the latest GDP figures were released, showing economic growth at 3.1%. This was significantly higher than expected, which was a good sign for the economy.
Speaking about the decision to keep rates on hold, Governor Glenn Stevens said: “Inflation has been quite low. Given very subdued growth in labour costs and very low cost pressures elsewhere in the world, this is expected to remain the case for some time.”
The release of the June quarter inflation figures will come at the end of July, and it’s likely that we won’t see any movements in the cash rate until then.
In his statement, Governor Stevens also noted that the following areas of the economy are showing improvement:
- Commodity prices
- Overall growth
- Credit to businesses
While more stringent lending standards have slowed the growth of house prices, particularly in Sydney and Melbourne, the Board did note that prices are starting to climb again. They are hopeful that a large supply of apartments due to come onto the market in Brisbane, Sydney and Melbourne will correct this.
Advice for borrowers
With interest rates being so low at the moment, now is a great time to get ahead on your mortgage. If your lender passed on the full rate cut last month, consider maintaining your repayments rather than spending the savings. This will help you to pay off your mortgage sooner and reduce the amount of interest you pay in the long term.
Maintaining a home loan has never been cheaper, so take advantage of low rates to get ahead.
The Brisbane property market stats you need to know
- Official cash rate: 1.75%
- Brisbane median house sale price: $618,000*
- Brisbane median unit sale price: $428,750*
- Auction clearance rate: 58%
- Best available variable interest rate: 3.88%
- Best available fixed interest rate: 3.74% (for a two- or three-year term)
*These are the latest RP Data figures from April, 2016. They are based on the median prices in the Brisbane City Council catchment only.
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