Will interest rates fall further?
It hasn’t had a great deal of media coverage just yet, but it seems that there are a growing number of economic forecasters who are tipping that we could see further cuts to official interest rates by the Reserve Bank.
More importantly for those who would love to see their home loan get a little more affordable, some are suggesting that the RBA could make a move as early as its first meeting of 2020, which will be announcing its decision on Tuesday the 4th of February.
One of the key indicators of future movements in official interest rates is the Australian Interbank Futures market, the place where our financial institutions make trades based on their expectations of future economic activity. Up until late December, the financial traders were suggesting that there was a 40% chance of a cut to official interest rates in February. However, with the impact of the Australian bushfires along with the global uncertainty brought on by the increased tensions in the middle east, the likelihood of a rate cut increased to around 65% during the past week.
Further confirmation of the likelihood of a February rate cut came in Bloomberg’s December survey of economists. This monthly review of the thinking of financial forecasters undertook a survey of 22 economists around the country and found that 18 of them were predicting that the RBA would cut Australia’s cash rate to 0.5 per cent next month.
Of course, it is important to remember that any further cuts to official interest rates are unlikely to have a major impact on the local property market, with most home buyers seemingly comfortable with the fact that the cost of their home loan is at record lows and likely to remain there for quite some time to come.
One tip we provide is that no matter who you bank with, it is always advisable to speak to an experienced, independent mortgage broker before you lock in your next home loan. Not only can they help you find the best deal, (often from sources that you may not have heard of), but they can also ensure that your loan includes a variety of features that best suit your lifestyle and future plans.
If you need a referral to a trusted mortgage broker, or you simply need some up-to-date advice on how to make the most of the opportunities that the current property market is providing, feel free to call our helpful team at Barry Plant Moonee Valley on 9373 0000.
Regards,
Bill Karp
Director – Barry Plant Real Estate
Essendon & Keilor East