The Reserve Bank of Australia (RBA) ended their last cash rate review board meeting of the year the same way as all other board meetings in 2017 – by leaving the official cash rate on hold at 1.50%. We explore RBA’s reasoning and what might lie ahead for borrowers and savers in 2018.
RBA on the Economy
- “Recent data suggest that the Australian economy grew at around its trend rate over the year to the September quarter”.
- “The central forecast is for GDP growth to average around 3% over the next few years”.
- “Business conditions are positive”.
- “The outlook for non-mining business investment has improved further, with the forward-looking indicators being more positive than they have been for some time”.
- “Increased public infrastructure investment is also supporting the economy”.
- However, “one continuing source of uncertainty is the outlook for household consumption. Household incomes are growing slowly and debt levels are high”.
RBA on Employment
- “Employment growth has been strong over 2017 and the unemployment rate has declined”.
- “Employment has been rising in all states and has been accompanied by a rise in labour force participation”4
- “The various forward-looking indicators continue to point to solid growth in employment over the period ahead”.
- “Wage growth remains low. This is likely to continue for a while yet, although the stronger conditions in the labour market should see some lift in wage growth over time”.
RBA on Inflation
- “Inflation remains low”.
- “The Bank’s central forecast remains for inflation to pick up gradually as the economy strengthens”.
RBA on the Property Market
- “Nationwide measures of housing prices are little changed over the past six months, with conditions having eased in Sydney. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years”.
- “Rent increases remain low in most cities”.
I’m about to be in the market for a home loan
Are you getting close to buying your first home? A great place to start is to speak with a qualified Mortgage Broker who specialises in first home buyers. A good Mortgage Broker can determine your borrowing capacity, assist you compare home loan options, help you get a home loan pre-approval, guide you through the whole finance process and of course, answer any jargon you don’t understand.
At First Home Buyers Australia (FHBA) we have linked up with Mortgage Australia Group (MAG) to provide the best mortgage broking service for first home buyers in Australia – FHBA Mortgages, powered by MAG. Why not start with a complimentary consultation with an FHBA Broker? Click here to find out more.
I’m still saving for a home deposit
Unfortunately, the rate of interest on savings accounts are relatively low at the moment. But when saving for a home deposit, as cliche as it may sound, every bit really does count. Here are some hot tips:
- Hot tip 1: Look at your expenses and consider whether you can cut back on any of your lifestyle expenses. A good place to start is our free Budget Planner.
- Hot tip 2: When was the last time you looked at how much interest your savings is earning? When you have a spare moment, take the time to check your rate of interest and compare this to other savings accounts and term deposits around the net. Some of Australia’s leading comparison sites include Mozo, Canstar, Finder and RateCity.
I want to know more about the RBA decision
Interested in reading full RBA statement from the December board meeting? You can access the RBA media press release here.
Did you know?
Did you know that you can protect yourself from a rate rise as a mortgage borrower? A fixed rate home loan allows you to lock in an interest rate for a period of time, such as 1 year – 5 years. This gives borrowers certainty around home loan repayments. But how do you choose whether to get a fixed rate home loan or go with the more common variable rate home loan option? Click here to learn more about your first home loan options.
When is the next RBA board meeting?
The next RBA board meeting will be held on Tuesday the 6th of February 2018.
What will the RBA likely do with the cash rate in 2018?
Check out these recent predictions made by Australia’s big 4 banks: big banks update interest rate forecasts
If you have any questions get in touch with your FHBA Coach today – we’d be happy to help!
First Home Buyers Australia
Not sure whether you have saved enough to enter the property market? Try our FHBA Deposit Estimator for free!