Cash rate re­mains at all-time low

Warwick Daily News - - FINANCE -

AUS­TRALIAN mort­gage hold­ers are on course to go a decade without ex­pe­ri­enc­ing an in­crease in of­fi­cial in­ter­est rates by the Re­serve Bank of Aus­tralia (RBA), says mort­gage bro­ker net­work 1300HomeLoan.

1300HomeLoan manag­ing di­rec­tor John Kolenda said the RBA has left its cash rate at the all-time low of 1.5 per cent since Au­gust, 2016, with its last rate rise from 4.5 per cent to 4.75 per cent way back in Novem­ber, 2010.

"Since the cen­tral bank last lifted of­fi­cial rates there have been 12 rate re­duc­tions, with the RBA now stay­ing on the side­lines for more than two years," Mr Kolenda said.

"With no ev­i­dence of a sig­nif­i­cant im­prove­ment in the do­mes­tic econ­omy, many fore­cast­ers ex­pect the cash rate will re­main on hold through 2019 and also the fol­low­ing year.

"That means a whole gen­er­a­tion of mort­gage hold­ers could go an en­tire decade without see­ing of­fi­cial rates rise, although they will have ex­pe­ri­enced out of cy­cle rate move­ments from lenders."

Mr Kolenda said there is no need for the RBA to do any­thing at the mo­ment with the mort­gage mar­ket con­strained by un­cer­tain house­hold con­sump­tion, fall­ing prop­erty prices in Syd­ney and Mel­bourne, the fall­out from the Hayne Royal Com­mis­sion’s fi­nal re­port and the loom­ing fed­eral elec­tion.

"Bor­row­ers face a very chal­leng­ing lend­ing en­vi­ron­ment with banks tough­en­ing their lend­ing cri­te­ria and con­duct­ing de­tailed ex­am­i­na­tion of bor­row­ers’ ex­penses and all forms of in­come used to ser­vice their re­pay­ments," he said.

"But, there is also strong com­pe­ti­tion be­tween lenders for your busi­ness, par­tic­u­larly if you have en­coun­tered rate rises over the last 12 months. My mes­sage to mort­gage hold­ers is ‘never be com­pla­cent’. You should al­ways be look­ing for the best home loan deal. Con­tact a mort­gage bro­ker to make sure you are get­ting the best terms pos­si­ble and, most im­por­tantly, save money."

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