Great news for borrowers!
The Reserve Bank of Australia’s Governor Philip Lowe says that the cash rate will stay low for the long term.
In its 4 September meeting, the RBA has decided to keep the cash rate unchanged at 1%, which means that borrowers can enjoy a longer period of lower interest rates on their home loans.
Will interest rates go even lower?
According to a statement by the Governor, “Mortgage rates are at record lows, and there is strong competition for borrowers of high credit quality.”
He further adds, “It is reasonable to expect that an extended period of low interest rates will be required in Australia to make progress in reducing unemployment and achieve more assured progress towards the inflation target.”
The governor has indicated that there might be a longer period of low rates and further cuts are a possibility in the future.
Many experts are predicting that cash rate will be lowered to 0.75% by the end of the year and further rate cuts might be on the cards in 2020.
Will lenders pass on any future rate cuts? ?
Of the previous two rate cuts in June and July, lenders passed on an average of 40 basis points (0.40%) out of the 50 basis points rate cut by the RBA.
However, lenders are unlikely to pass on the full rate cut because they are in a difficult situation.
The lower rates on deposits mean people with cash in the bank are likely to move their funds elsewhere such as the share market to get better returns, which means banks have no money to lend out!
Therefore, they are likely to maintain a good rate for savers and not pass on the full rate cut to borrowers.
The good news is several lenders on our panel are already offering 3 and 5-year fixed-rates lower than 3%.
Furthermore, first home buyers might be encouraged to get into the property market faster to take advantage of the lower fixed interest rates.
The extended low-interest rate environment is expected to drive property growth upward as well.
According to the latest QBE Australian Housing Outlook 2019-2022, house prices across all capital cities are set to rise in the next three years, with Brisbane expected to grow by at least 20% followed by Adelaide at 12.7% and Darwin at 7%.
How do you take advantage of record low interest rates?
Generally speaking, if you haven’t checked your mortgage interest rate in the last two years, you’re paying too much!
It’s best to simply compare the rates among lenders to see which one is offering the most competitive interest rates at the moment and refinance to a lower rate.
Whether there will be rate cuts in the future or not, our specialist mortgage brokers know exactly which banks and lenders are offering the most competitive interest rates on the market at any given time.
Get in touch with our award-winning mortgage brokers to get the best rate on your mortgage.
Give us a call on 1300 889 743 or fill in our online assessment form to discuss your needs.