RBA votes to hold rates
In a widely expected announcement, the Reserve Bank of Australia (RBA) left the cash rate at 2.50 per cent at its September board meeting. According to mortgage broker Loan Market, the election and August rate cut were the two key influences on this decision.
Loan Market director Mark De Martino said that the August rate cut has injected plenty of activity into the home finance market with extremely low interest rates helping existing mortgage holders save money and potential buyers get into the property market.
Mr De Martino said that an ultra low cash rate and the easing cost of funding issues have been a one-two punch of opportunity for people to save money on their home loans.
"A cash rate of 2.50 per cent has resulted in the lowest interest rates most home owner have had for their existing property. Additionally, the easing cost-of-funding issues have helped banks trim off their interest rates to remain competitive,” Mr De Martino said.
Mr De Martino said that the upcoming election was another important consideration for the RBA board members because of the unknown direction the economy might take after a new government takes office.
“The spending or savings initiatives promised by a new government will be important for the RBA to consider when choosing to raise or lower rates. Although key economic indicators such as inflation and employment continue to suggest another rate cut is needed this year, a new government taking office may inject the confidence needed to sway the need for more rate cuts.” he said.
Mr De Martino said that he expected September home finance activity to remain high following the busiest month the brokerage had in one year.
“The August rate cut gave our business more finance enquiries than any other month in the past 12 months. Home owners and potential buyers are starting to realise just how competitive lenders are acting and that they can save thousands of dollars by shopping around.”