Today the Reserve Bank of Australia met to decide on the cash rate for the month ahead. This month’s decision is the last cash rate update for 2016 with the next update scheduled for the first Tuesday in February 2017 (07/02/2017).
Phillip Lowe, governor of the Reserve Bank, released the decision to leave the cash rate on hold at 1.5% for December 2016 and made the following comments in his accompanying monetary policy decision statement:
- The global outlook for inflation is currently more balanced than it has been for some time;
- Higher commodity prices reflect both stronger demand and cut backs in supply in some countries. Higher commodity prices have in turn supported a rise in Australia’s terms of trade, although they remain lower than they have been in recent years;
- Higher commodity prices are providing a boost to national income;
- In Australia, the economy continues to transition following the mining investment boom;
- Slowdown in the year ended growth is likely before it picks up again;
- Funding costs for some borrowers have recently risen, but overall funding costs are still low and accommodating;
- Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 has been helping the trading sector;
- Conditions in the housing market have strengthened overall, although they vary considerably across the country;
- Supervisory measures have strengthened lending standards and some lenders are taking a more cautious approach to lending in certain segments; and,
- Taking in to account all the available information, and having eased monetary policy earlier in the year, the board judged that holding the stance of policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.
To read the full monetary policy decision statement released by the RBA today please click here.
The RBA’s decision to leave the cash rate on hold is an outcome that was much expected and is consistent with the predictions made by all 26 economists surveyed by Bloomberg.
Tim Lawless, head of research at Core Logic, explained to Australian broker that with two months before the next RBA meeting the bank will have time to consider the performance of the housing market throughout the final quarter of 2016, as well as GDP and inflation figures. Additional Mr Lawless commented on the fact that by time the next RBA update comes around there will be further clarity on the economy in the US where employment is at a nine-year low and there is a lot of speculation that interest rates are about to start ratcheting higher.
So, what does it all mean?
With mortgage interest rates at an all-time low also, credit lenders around Australia are in high competition with each other to offer unique and attractive rates and products.
If you are a home owner and you have a mortgage, now is the perfect time to review your financial solution and ensure that you are still using the most suitable solution available or if you could be saving yourself money by refinancing to a more suitable loan product.
If you have any questions about your mortgage or about the cash rate and how it impacts you, please do not hesitate to contact iconic home loans on 1300 663 943 or by enquiring via our website. Alternatively, you can send us an email now with the details of how we can help and someone will give you a call back.
Thanks for taking the time to read this update guys, have a great week ahead!
iconic home loans
*The information provided here is general only and your personal circumstances have not been taken in to consideration during its preparation, you should seek independent advice before making any decisions in relation to your personal finances. Finance availability is subject to applicant satisfying lenders qualifying criteria and all approvals are at the discretion of the lender.