In its 2016 April meeting the Reserve Bank of Australia (RBA) continued with the trend of the last few months and left the official interest rate unchanged at 2.0%. The RBA’s decision was based on a continued positive assessment of Australia and a somber overseas economic outlook.
With the available information, the RBA’s decision painted an economy continuing positively to rebalance in the non-mining sectors.
Lending to business has also been stronger. The more positive environment has translated to higher labour growth and a pickup in the employment rate. Additionally, growth in dwelling prices has moderated in Melbourne and Sydney and has remained mostly subdued in other cities. According to the RBA, inflation (CPI) continues to be quite low and within target and even the more recent labour cost increases were relatively subdued. The RBA also noted that worldwide inflation continues to remain subdued.
The one area that the RBA is keeping an eye on is the Australian dollar, which has appreciated contrary to many market expectations. The RBA would like to see it depreciate from current levels as its sees a lower Australian dollar (below US 70 cents) as supporting the economy. It will keep monitoring monetary developments elsewhere in the world as they have played a role with the higher Australian dollar. Official interest rates affect the rates offered to lenders and borrowers.
Conservative investors and savers continue to find competitive/worthwhile offers difficult although there has been a small increase in rates in the shorter-term end. Conversely, lenders are finding it harder to find better deals as there has been very little increase in lending rates.
Nevertheless, there is a contrast between the lowest and the highest on offer. Below are the latest “best” rates available for both lenders and investors.
|Providers – investors||6m||1yr||3yr||5yr|
|Pacific Mortgage Group||Variable||3.95%|
|Heritage Bank||Home Advanatage||4.08%|
|Bankwest||Complete Variable Home Loan||4.08%|
|ING DirectMacquarie||80% Variable Loan||4.13%|
Nick Stratus, Solid Financial Advisors, 11th April 2016