For the eleventh month in a row the Reserve Bank of Australia (RBA) has left interest rates on hold. The cash rate, of 2.5%, has remained unchanged since August 2013. At last month’s meeting, the RBA acknowledged that current economic conditions are mixed here in Australia, but the risk of further deterioration is easing.
This outlook has also been helped by an improving overseas environment where the key central banks are keeping interest rates very low with expectations to continue to do so.
Perhaps, the most interesting interpretation of the July session is that most economic forecasters and analysts now believe that there will be a prolonged period where official interest rates will be stable for at least another 12 months.
According to many of the forecasters, the RBA no longer needs to provide additional ‘fine-tuning’, which included an anticipated rate cut in the September quarter 2014. While there are expectations of challenges to the Australian economy in the near term, the general view is that the RBA does not see the need for additional monetary policy accommodation.
Official interest rates affect rates offered to lenders and borrowers. With official interest rates now likely to be on hold for longer, we expect rates offered both for lenders and borrowers, to edge slightly lower over the coming months. Below are the latest “best” rates available.
|Qantas Credit Union||3.75%||3.75%||4.25%|
|Company||Product||Comparison on rate*|
|Loans.com.au||Dream Home loan||4.58%|
|Yellow BrickRoad||Rate Smasher||4.71%|
|State Custodians||Breath Easy Offset||4.74%|
The comparison rates for all home loans are based on secured credit of $150,000 and a term of 25 years. WARNING: The comparison rate applies only to the example given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees and cost savings such as fee waivers are not included in the comparison rate but may influence the cost of the loan.
Nick Stratus, Solid Financial Advisors, July 2014
Contact Nick on (03) 9500 8000 for more information.