On Tuesday the 06th of February, the Reserve Bank of Australia (RBA) decided to maintain the interest rates at 4.35% following a period of slower inflation toward the end of 2023. Many experts are predicting that we have already hit the peak of this interest rate cycle due to the inflation rate slowly coming under the RBA’s control, which does spell some positive news for aspiring first home buyers.
Let’s break down what this month’s meeting decision means for first home buyers:
Interest rate stability
The RBA decision provides a reprieve for current borrowers and aspiring first home buyers. The cost of borrowing remains unchanged and most lender’s are currently reviewing their fixed and variable rates on offer for new customers looking to buy their first home. With many experts predicting that rates will remain unchanged for the foreseeable future, this will give first home buyers more confidence that we may have seen the last of the rate rises in this cycle.
First home savers
When the RBA maintains interest rates, savings account and term deposit rates also remain stable. Savers won’t see an immediate increase in their returns, but they won’t experience a decrease either. Some savers may consider alternative investments to boost their returns. These could include investing in shares, bonds, or other assets. However, these options come with risks and require careful consideration or financial advice.
See what first home buyer rates are available now
Mortgage repayments
For those aspiring first home buyers looking for a variable interest rate home loan, these rates can be sensitive to the RBA’s cash rate movements. Since this rate hasn’t changed over the last 3 months, first home buyers are actually able to get lower interest rate offers now which has an impact of reducing your mortgage repayments.
Inflation outlook
As the RBA’s decision every month is heavily reliant on the inflation figures, the fact that the inflation is at the lowest point since 2022. Although it is still outside the RBA’s target band range of 2-3% it is heading in the right direction, which may result in no more rate rises in this interest rate cycle. Many banks are actually predicting for the next interest rate movement to be a rate cut rather than a rate rise.
Will interest rates fall in 2024?
The major banks of Australia (ANZ, Commonwealth Bank, NAB & Westpac Bank) are predicting that interest rates will remain stable for the majority of 2024 before a potential rate cut in the second half of the year. The Big 4 banks are also predicting the RBA cash rate to fall to below 3% in 2025. This means that first home buyer rate offers could be between 4 & 5% in 2025!
In summary, the RBA’s decision to hold interest rates has implications for both savers and home loan borrowers. It’s essential to stay informed and consider how this impacts your financial situation.
What rates are on offer now?
The good news is that over the past few months, most lenders have cut their advertised fixed rates to below 6% and variable rates are also trending towards below 6%. Australian lenders have a good track record of predicting which way the interest rates are going to go in the future, therefore this is a good sign for aspiring first home buyers looking to buy their first home in 2024.
At FHBA Mortgages, you can compare home loans by clicking on the button below or alternatively you can book a call with an FHBA Coach. Our Coaches will be able to give you a tailored quote based on your credit history & deposit levels.
Written By,
First Home Buyers Australia
