RBA Cuts Cash Rate to Record Low of 1.75%

Real Estate News

After a year of the national cash rate being held at 2%, the Reserve Bank of Australia have today announced a rate cut to 1.75%. In this article, C&G take a look what this means for the real estate market and the wider economy.

After much speculation, the national cash rate has been cut to 1.75%, despite many pundits expecting the status quo to continue. This historic cut coincides with a recent drop in core inflation. After a year of rate stability, the cut comes as quite a curve ball to both lenders and consumers, with the National Australia Bank already announcing that they’ll pass on the rate cut to mortgage holders, with their standard variable rate dropping from 5.6% to 5.35%. That said, the last rate cut in May 2015 saw 60% of lenders refusing to pass on the full rate saving to their customers. Brokers and loan comparison sites will certainly be busy over the coming weeks! Considering taking advantage of this new rate low by growing your property portfolio, ‘trading up’ or buying your first home? Take time to consult with your trusted financial advisor to take advantage of today’s unique lending circumstances.

The rate cut and its subsequent savings for home owners and prospective buyers will instil a fresh level of confidence in property investment, allowing first time buyers the opportunity to enter the market, and existing owners to get ahead on their mortgage repayments. Whilst instinct suggests the rate cut will make buyers additionally competitive in their desire to acquire property, experts are reassuring keen buyers that there is little concern of an overheating market. A sudden spike in property prices is unexpected, so while demand may be higher during this low-rate period, don’t panic. Rather, be proactive. If your goal is to buy while rates are competitively low or sell whilst property purchasers are supremely confident, be sure to take action sooner than later. The tightening of investment lending over recent months has slowed some markets in Sydney and Melbourne, leaving the RBA to focus on the health and wealth of the wider economy.

Curious about how today’s rate cut might offer opportunities for you as a buyer or vendor? Meet with a member of Chisholm and Gamon’s friendly team, who will keep you up to speed on market trends Bayside, and how best to take advantage of Australia’s uniquely low interest rates by investing in premium real estate.