RBA Announcement 4/5/21
So it’s no surpise that the RBA has decided to not move the cash rate from it’s historic low of 0.1%. This is no surprise as the RBA has stated emphatically that the rates will not increase until 2024 - that’s another 3 years away!
There’s no doubt that low rates are fuelling the property boom we’re seeing all across Australia, but more importantly is helping the economy recover from severe lockdowns and a shutdown local and national economies. Rates will have to inevitably rise; they can’t go any lower! But, I don’t think this is something we need to worry about - The RBA and the Federal Government will not risk dampening economy activity; it would be political suicide! Their main goals now are to reignite the economy and get things going again.
What does this mean for you? With rates so low, you should, at the very least examine your current finances and see what savings or changes can be made. If you have a home loan, you could consider refinancing. As example, someone with a $400,000 mortgage, paying Principle & Interest could save $50 a week in repayments and over $70,000 in interest payments over the life of the line.* That’s a huge saving!
There are countless examples we can provide, but you get the gist - the lower the rate, the lower the cost of the money. The lower the cost of money, the more money you can save.
Are rates likely to increase before the 2024 deadline noted by the RBA? I mean, it’s possible but one thing we can be certain of is that the RBA and Government have no incentive, in both the short and medium term to dampen property prices and economic acivity. Things will get interesting when the Government releases their budget - lets wait and see what impact this will have on possible rate rises in the future.
To see how you can take advantage of lower rates, please call us on 0422 854 342 or visit us at www.nextstepbroking.com.au
Written by John Afendulis
Next Step Mortgage Broking
*Here we have assumed the client went from a rate of 3.5% to 2.5% and refinanced for another 30 years. 