Another slash to the official cash rate

By the resi financial blog team, 06 September 2013

RBA cuts interest rates in September 2013

After leaving the official cash rate unchanged at 2.75 per cent for the last two months, the Reserve Bank of Australia (RBA) has decided to make another reduction this year at its latest meeting.

A 25 basis point reduction has resulted in the rate being dropped to 2.5 per cent, being the second cut made this year.

Once the rate has been passed on by banks and mortgage lenders it will allow many more people to afford property purchases.

Lower interest rates may also present a good opportunity for current home owners and investors, and may indicate a good time to refinance.

According to the RBA governor Glenn Stevens, the board based its decision on a number of economic factors.

This includes sluggish growth in the Australian economy due to the slowdown in mining investment, below-trend growth in the global economy, and gradually rising unemployment rates in the country.

However, an encouraging sign for the real estate industry is that there have been "signs of increased demand for finance by households", according to Mr Stevens.

At the same time, the level of borrowing has been slightly subdued, but the increased demand for finance may indicate that confidence is returning to consumers.

Once the rate reductions have been passed on, it may help to alleviate financial pressures for many household budgets across the country.

"At today's meeting, and taking account of recent information on prices and activity, the Board judged that a further decline in the cash rate was appropriate," said Mr Stevens.

The rate cut has been welcomed by the Real Estate Institute of Queensland (REIQ), with the chief executive officer Anton Kardash stating that it shows the market is heading into "positive territory".

"All of the signs signal that this year’s spring selling season will be one of the best for quite some time especially once the federal election is behind us," said Mr Kardash in an August 6 statement.

If you are thinking about purchasing a home or refinancing in the near future, contact a resi loan specialist to discuss your options.

Categories: Home Loans