Cash rate remains at all-time low
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."