Earlier this afternoon the Reserve Bank of Australia (RBA) board decided to cut the official cash rate to a record low 1.5%.
The RBA noted in their press release that recent data showed inflation to be “quite low” and that “this is expected to remain the case for some time”. The statement went onto to say that a rate cut was needed to support a “sustainable growing economy”.
The RBA also dismissed the concerns that a rate cut could make property prices jump further. “Supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments. The most recent information suggests that dwelling prices have been rising only moderately over the course of this year, with considerable supply of apartments scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in lending for housing purposes has slowed a little this year. All this suggests that the likelihood of lower interest rates exacerbating risks in the housing market has diminished” the statement said.
— FHBA (@fhba_com_au) August 2, 2016
Co-founder of First Home Buyers Australia (FHBA) Taj Singh said “record low interest rates are a great concern for those in the deposit savings phase. Record low interest rates helps those with home loan repayments to make. But not those trying to save a deposit, they will see their savings returns decrease after this RBA announcement”. Taj added “more needs to be done to support hard saving deposit savers across Australia”.
Fellow FHBA co-founder Daniel Cohen echoed Taj’s comments. “Recently their was a report which suggested that the RBA is partly to blame for record low first home buyer numbers. Low interest rates thus far have failed to boost first home buyer activity. Lower interests rates increase the borrowing capacity of everyone, including investors. Variable home loan borrowers will also benefit with lower interest repayments on their home loans. But it’s tough to be a deposit saver right now” Daniel explained.
I’m about to be in the market for my first home loan
Today’s RBA rate cut could potentially help your personal situation. We recommend you speak to an FHBA Broker for a complimentary consultation to discover your borrowing capacity and estimated home loan repayments if you were to buy now. To arrange a free consultation with FHBA Mortgages please click here.
I’m still saving for a home deposit
Today’s RBA decision isn’t great news for deposit savers unfortunately, as many savings accounts interest rates could fall. To monitor the latest savings rates try our savings comparison pages: