RBA cuts the cash rate to 2.0 per cent

The Reserve Bank of Australia has cut the official cash rate by 25 basis points to 2.0 per cent. This is the second time this year that the cash rate has been lowered, having been lowered by 25 basis points in February from 2.50 per cent to 2.25 per cent and is now at an all time low.

For anyone looking to buy a property, then there’s no better time to take out a mortgage, with extremely low mortgage repayments available. However, borrowers should still be wary of their monthly repayments, and not overstretch their budgets too far as interest rates are likely to rise again.

The demand for residential dwellings is still strong, especially in Sydney with dwelling prices still rising whilst unemployment numbers are falling which is adding to consumer confidence.

It is important for the RBA to keep an eye on property prices, with house prices continuing to increase in Sydney by more than 10 per cent a year. Any more cuts might spin these prices out of control resulting in financial instability later on.

Even though the global economy is expanding, commodity prices have continued to fall over the past year and the Australian dollar has also fallen against the rising US dollar. The lower interest rate will also mean that the dollar will become less attractive to foreign investors and savers, whilst those relying on the interest from bank deposits such as retirees won’t be too pleased with the cut.
Published on 5th of May 2015 by Marty Stanowich
Marty Stanowich
Marty Stanowich

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