RBA Cash Rate Update

Wednesday 04 Sep 2019

RBA Announcement:

The RBA has once again decided to keep the Cash Rate on hold this month which enables them a bit more time to assess how the recent rate cuts have influenced the market.

Economists are predicting at least 1 more rate cut in future months. This has been reflected in lenders offering historically low fixed interest rates below 3%.

If you are wanting to discuss how recent lender interest rate changes affect you, please contact our office on (02) 9300 6699.

Lending update:

For the first time since October 2017, Corelogic’s Monthly Home Value Index increased in August by 0.8%. This seems to represent a small bounce in the property market following the Liberal party retaining power, 2 recent cash rate cuts by the RBA and Lenders reducing their assessment rates.

The underlying concern we have for the Australian economy is the statistics around employment and under-employment as

Even though interest rates have reduced, borrowers don’t necessarily have extra cash available in their bank accounts to spend and stimulate the economy. This is because the physical repayment for a Principal and Interest loan doesn’t actually reduce when the interest rate reduces. What actually happens is the monthly repayment stays the same but the interest portion of this payment decreases while the amount of principal you pay off increases. Therefore, borrowers are paying off debt faster but they are unable to spend this interest rate saving as this saving is not cash in their bank account.

Our team at Intelligent Finance is well educated in understanding the ins and outs of all the changes happening in the Australian lending landscape and are ready to assist with all of your current and future property finance requirements.

 

- Justin Doobov