The RBA have left the official cash rate on hold this month at 2.5 percent.
This decision was based on:
The Australian dollar still remains high;
Commodity prices have declined, but remain high;
Inflation in most countries is contained;
Global financial conditions remain stable;
Volatility in financial markets has abated; and
Unemployment is edging higher.
Unfortunately, home owners will not receive a christmas bonus from the Reserve Bank of Australia (RBA) this year. Instead, the RBA have once again left rates on hold as they are said to be content with current economic data.
The Reserve, according to economists, is biding its time and playing a waiting game. This is particularly the case with the Australian dollar, which is said to be a heavy influence on leaving the cash rate on hold.
Reserve Bank Govenor Glenn Stevens is considering ways to lower the dollar rate, but he is not convinced that intervention is the best solution at this stage.
Home prices are gradually rising, but not enough to suggest that a potential “bubble” is forming. However, there is still current speculation that if home prices growth continues, then further rate reductions will occur in early 2014.
In the meantime, financial experts are suggesting that investors look to buy now, rather than later. Prices are still relatively low and good capital growth is expected, providing that investors research the market well, before buying. Furthermore, home owners are being encouraged to pay off as much as they possibly can on their mortgage, especially with rates at a 53-year all-time-low. Paying more off the mortgage now, means that less money is spent on interest and that more is going towards paying off the home loan principal. This, in turn, is reducing the total interest paid over the term of the loan.
So, while there has been no official decrease in the cash rate, this doesn’t mean that home owners and investors cannot take advantage of the current market conditions and to get ahead financially. Financial experts are even suggesting that NOW is the best time to think about fixing your home or investment loan, as while rates may get a little lower, it’s highly unlikely that they will get substantially lower.
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