There will be no RBA winners or losers in the mortgage stakes on Melbourne Cup race day this year, as the RBA have decided to scratch their runner ‘Rate Reduction’ and to leave the official cash rate on hold for another month.
Economist’s state that it is highly unlikely that another cash rate reduction will be seen this year. Instead, they are predicting that a rate reduction will occur in February of 2014 and possibly again in May of 2014. Predictions suggest that a quarter of a percent reduction will be likely on these dates.
Bill Evans, Westpac chief economist said that improving consumer and business confidence means that the RBA do not need to introduce a third rate cut in 2013. But, RBA Govenor, Glenn Stevens recently stated that it was too soon to rely on confidence data. Instead, the RBA will wait to see how economic indicators progress.
Many economists are speculating that the RBA will play the waiting game as economic growth is still below average. However, most economists agree that another rate cut, possibly two, may be likely over the next 12-months. These same economists are also speculating that rates will not begin to climb until 2015.
This for homeowners and investors is good news. Why? Well, if you’re a homeowner, then paying more off your mortgage over the next 2-years, while rates are low, can save you thousands in interest over the term of your home loan. Investors, on the other hand, are surrounded by a buyer’s market. Where home demand is low, home prices are low and starting to climb, and investment loans are very affordable. Buying now could see you paying less upfront and over the term of your investment loan. This, in turn, may see you make more of a return on your investment when it comes time to sell.
Rate cuts to-date have been slashed by 2.25 percent to a 2.5 percent low. This has reduced monthly mortgage expenses on an average $300,000 home loan by $450 per month.
Want to know more about how you can pay off your mortgage faster or how you can take advantage of our investment home loans? Then talk to eChoice and discuss your options TODAY!
Written by eChoice