As anticipated by Australian banks and economists, The Reserve Bank of Australia has today made the decision to drop the cash rate by 25 basis points to 2.0%, this change will be effective from the 6th May 2015.
The cash rate is now currently the lowest that it has ever been in what is likely an attempt to continue to stimulate the expanding Australian housing market.
In the release of their decision this afternoon, Governor Glenn Stevens made the following comments:
"The global economy is expanding at a moderate pace, but commodity prices have declined over the past year, in some cases sharply. These trends appear largely to reflect increased supply, including from Australia. Australia's terms of trade are falling nonetheless.
The Federal Reserve is expected to start increasing its policy rate later this year, but some other major central banks are stepping up the pace of unconventional policy measures. Hence, financial conditions remain very accommodative globally, with long-term borrowing rates for sovereigns and creditworthy private borrowers remarkably low.
In Australia, the available information suggests improved trends in household demand over the past six months and stronger growth in employment. Looking ahead, the key drag on private demand is likely to be weakness in business capital expenditure in both the mining and non-mining sectors over the coming year. Public spending is also scheduled to be subdued. The economy is therefore likely to be operating with a degree of spare capacity for some time yet. Inflation is forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.
Low interest rates are acting to support borrowing and spending, and credit is recording moderate growth overall, with stronger lending to businesses of late. Growth in lending to the housing market has been steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for equities and commercial property have been supported by lower long-term interest rates."
What does the cash rate drop mean for you?
The Reserve Bank's decision means that we will continue to see all-time low interest rates offered around the country. There has literally been no better time than now to review your home loan and assess whether you could access an interest rate/product that is more suited to your personal and financial needs.
By reviewing your home loan, other debts, and financial circumstances with an Iconic broker, you could potentially save thousands of dollars on loan repayments and interest. Don't wait any longer, contact Iconic Home Loans today on 1300 663 943 to arrange a complimentary review appointment with one of our experienced brokers!
Thanks for reading, and have a great week ahead.
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