At its May meeting, the Reserve Bank of Australia (RBA) decided to cut rates for the second time this year, bringing the official cash rate to a new record low of just 2.00 per cent. The move has excited a flurry of activity from lenders, as they start to drop home loan interest rates again for the second time this year.
The question is: can interest rates drop even further? Market analysts are speculating that even more rate cuts may be on the horizon. The RBA’s most recent move to lower interest rates is an effort to stimulate economic and employment growth, and lower the Australian dollar to support our export markets. If global factors continue to put upward pressure on the Australian dollar, and business confidence continues to flag, there is speculation that RBA may move to cut rates again later this year, bringing the cash rate below 2.00 per cent.
Whilst the latest rate reduction was a positive for homeowners, the WA first home owner market took a hit when the WA 2015-16 state budget was delivered on the 14th of May 2015. The WA Government has announced that the first home owner grant of $3,000 will be removed for the purchase of established homes in WA, and whilst this doesn’t affect the $10,000 new home sale grant, it is unwelcome news for those looking to enter the property market for the first time.
The announced first home owner grant change will not take effect until amending legislation is passed by the Parliament, which is expected to occur during the latter half of 2015. The grant will remain in place for eligible applicants purchasing established homes with contracts signed before the legislation is passed.
If you are a first home buyer and have been looking to get into the WA market, now could be the perfect time to make the move with record low rates and the WA $3,000 grant available for a limited time.
This article first appeared in our Quarterly Bourkes Report.To receive this publication, please subscribe to the Bourkes Newsletter.