As was widely predicted, the Reserve Bank of Australia (RBA) has announced at its final meeting for 2016 that it will be leaving the cash rate unchanged at 1.5%. Whilst this comes as no surprise, some experts believe that this historically low rate won’t last in 2017, as lenders are already starting to increase their interest rates. Governor Philip Lowe had this to say:
“Low interest rates have been supporting domestic demand and the lower exchange rate since 2013 has been helping the traded sector. Financial institutions are in a position to lend for worthwhile purposes. These factors are assisting the economy to make the necessary adjustments, though an appreciating exchange rate could complicate this.”
“Conditions in the housing market have strengthened overall, although they vary considerably around the country. In some markets, prices are rising briskly, while in others they are declining. Housing credit has picked up a little, although turnover of established dwellings is lower than it was a year ago. Supervisory measures have strengthened lending standards and some lenders are taking a more cautious attitude to lending in certain segments. Considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities. Growth in rents is the slowest for some decades.”
So, what does all this mean for you? In recent weeks, a number of lenders have moved out of sync with the RBA cash rate, meaning that change can come at any time. Keep a close eye on any rate movement, and consider whether your current loan is the right one for you, right now.