The Reserve Bank of Australia recently reduced the official interest rate by one quarter of a per cent to 2.50%. This is a record low and has delighted borrowers.
The RBA has been monitoring the state of the economy and believes the latest interest rate cut will help build business confidence in the non-mining sectors. It notes that the economy has been performing a “bit below trend and is expected to continue so in the near term”.
Interestingly, the Governor of the Reserve Bank states that “further declines” in cash rates was appropriate. This is supported by financial markets, which are pricing in one more rate cut this year.
At Solid Financial Advisors we continually monitor interest rates. For investors, the comparison “best effective rates” for six month, one and three year rates for term deposits of $ 25,000 are:
|6 month||1 year||3 years|
|U Bank||4.21%||U Bank||4.10%||Teachers Mutual Credit||4.40%|
|Teachers Mutual Credit||4.05%||ME Bank||4.10%||RaboBank||4.40%|
For borrowers based on a loan of $ 250,000 and a term of 25 years, the “best” comparison variable rates on the market are:
|Loans.com.au – Blackboard special:||4.49%*|
|BankWest online home loans:||5.13%*|
|Greater Rate – Variable:||5.14%|
Please Note: These rates may vary depending on the dollar value and conditions applied by the lending institution at the time of the offer. Different terms, fees or other loan amounts might result in different comparison rates. * Online only. The comparison rates are true only for the example given and do not include all the fees and charges such as redraw fees and early repayment fees. These may affect the cost of the loan. 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 Advisers
Please contact Nick at Solid Group on (03) 9500 8000 if you have any queries or require further information.