At their first meeting of the year the Reserve Bank of Australia (RBA) provided Australian households with a new year’s gift, lowering the cash rate for the first time since August 2013 to a new historical low of 2.25%. With the recent low market sentiment this rate reduction has been a blessing with a spike of activity expected off the back of this change.
The banking institutions across Australia quickly followed the Reserve Banks lead, offering historically low fixed and variable rates to new and existing clients. With 3 year Fixed rates at 4.24% and even 5 year fixed rates at 4.39% money has never been cheaper, with the banks doing all they can to encourage their customers to look at their options and revisit the property market.
First Home buyers who have been struggling of late to enter the market in their very competitive market segment will see this an added bonus, as not only will their required monthly mortgage requirements decrease, but this decrease in rates also increases their ability borrow, which should provide greater confidence when looking to purchase their first home.
There has already been talk of further rate decreases throughout 2015, with the unemployment forecast shifting upwards and Australian growth forecasts weakening. Further rate reductions will add fuel to the already very competitive mortgage market, which can only be of benefit to households around Australia.
With interest rates at record lows there has never been a better time to review your financial situation to ensure you are in the best position you could be, both now and for your future.
This article first appeared in our Quarterly Bourkes Report.To receive this publication, please subscribe to the Bourkes Newsletter.