Continuing with the trend of the last few months of keeping rates on hold, the Reserve Bank of Australia (RBA), in its September meeting, kept official rates at 2.0%.
The RBA’s decision was based on the global economy expanding at a moderate pace, with some further softening in conditions in China and East Asia, but stronger US growth.
The RBA decision also reflects the view that the Australian economy is experiencing moderate expansion but has been somewhat below longer-term averages even though labour market outcomes have been decent.The RBA’s also noted that the economy is still operating with some spare capacity with inflation being contained and consistent with its target range. Interestingly, the “moderate” Australian economy has seen Australian markets price an interest rate cut by June 2016!
Talking of interest rates, a crucial development this time has been the expectation of the US Federal Reserve increasing its policy rate in the near period ahead. The prospective interest rate increase, the first time in nearly a decade, will not only influence international monetary policy strategies but impact possible growth in other countries. It is no wonder that the anticipation of higher interest rates is creating angst in the financial markets. Keep a lookout in the news!
Official interest rates affect rates offered to lenders and borrowers. For borrowers, their borrowing costs have been at historical lows.
On the other side of the equation, conservative investors and savers continue to find it harder to “earn a decent rate” as term deposits have fallen to lower rates. Even 5-year term deposits are offering sub-par 4 percent; just ahead on inflation. The contrast between the lowest and highest offer rates remains close.
Below are the latest “best” rates available for both lenders and investors.
|Providers – Investors||6m||1yr||3yr||5yr|
|Bank of Baroda||3.10%||3.15%||3.25%||3.30%|
|Gateway||Premium Special Offer Variable||4.09%|
|Bank Australia||Basic Home Loan||4.10%|
|CUA||Fresh Start Variable||4.18%|
|Bank of Queensland||Low Rate Special||4.19%|
|Qantas Credit Union||Low Cost Home Loan||4.24%|
The comparison rates for all home loans are based on secured credit of $ 250,000 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.
Contact Nick Stratus of Solid Financial Advisors for your financial planning needs on 03 9690 2666 or firstname.lastname@example.org