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The Cash Rate Has Fallen: RBA Cuts Cash Rate to All-Time Low 1.5%
This afternoon, Governor Glenn Stevens announced that the board had decided to cut the cash rate to a new all-time low of 1.5%. In today’s blog, C&G examine what the latest cut means for the property market and the wider economy.
The Reserve Bank of Australia announced on Tuesday afternoon that the official cash rate would be cut to 1.5%. Following the May rate cut from 2% to 1.75%, there was speculation surrounding another slash to rates - though it wasn’t widely anticipated.
The national cash rate cut comes as the result of consistently poor inflation rates, coupled with unemployment remaining below 6% for four consecutive months. While the global economy has begun to recover from the initial turmoil following the UK’s decision to leave the EU, it remains volatile, though the Australian Dollar has remained resilient thus far.
The RBA’s other influencing factor is likely a noticeable cooling of house price growth, with capital city prices rising at a much slower pace than this time a year ago. The low rate does however lend itself to a buyer’s market in some locations, overall boosting the winter property market both here in Melbourne and Australia-wide. As we move towards the robust spring real estate boom, demand from buyers is set to be hot given the facilitated lending and stimulatory environment for public spending.
That said, the Big Four banks are emerging with their offering to borrowers, and so far, between 10 and 15 basis points are being withheld. The all-time low rates, however, still remain accommodative for first time buyers and others looking to purchase property.
For more advice on getting the most out of the low cash rate and finding the right property for you, visit one of our four Chisholm & Gamon offices in Port Melbourne, Elwood, Black Rock and Mount Martha.