Interest Rate Cuts – The affect on Home Loans
The Reserve Bank of Australia announced more interest rate cuts after it has already done so last June and July. The first of October saw another significant change in recent months, with twenty-five (25) basis points being cut. It marks the first time in Australian history that cash rates have gone under 1.0 percent.
What’s Been Happening in the Recent Months?
The Reserve Bank has not exactly been secretive about its intention to cut the cash rate. Along with recent global trends, it makes it no surprise that cash rates have been cut yet again. According to RBA governor Philip Lowe, “Interest rates are very low around the world and further monetary easing is widely expected.”
It is the third time that the RBA has done major cuts in the last five months. The other two instances occurred last June and July. This month’s cuts happened even though there was a 0.9 per cent jump in home pricing in September.
What’s the Reason For the Cash Rate Cuts?
It’s not just Australia that has low rates at present. The interest rates from all over the world are considered to be lower than average. Inflation rates have been subdued in the past years, and global economies have been affected. Central banks around the world are expected to respond to these trends accordingly. Cutting cash rates is a typical response.
Another reason for the all-time low cash rates has to do with unemployment figures. Recent reports say that unemployment rates are the highest in Australia in months. August data showed unemployment rates of 5.3%. A contributor to this rate was the more than 15,000 full-time jobs being shut down.
What Should You Expect in the Near Future?
Experts predict that the interest rate cuts will be here to stay. Local banks have followed these rates to some degree, and continue to do so.
Even more, reductions are predicted to come in the following months and may go on until early next year. According to economists, the current trend is expected to continue for quite some time. The next increase in interest rates will not likely come until 2021.
Those with loans and those that plan to take out loans should take note. If you offer financial services, including home loan refinancing, contact EMBR today to find out how lead generation can revolutionise your sales conversion.