Interest rates: Where to now?
For those of us with long enough memories to remember the days when homeowners were paying 16-18% interest on their home loans, the current record lows in official interest rates probably seem like a gift that’s hard to beat.
However, 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 in 2020. In fact, we’ve seen a few forecasters saying that the Reserve Bank could make the move as early as the first official meeting of the Board for the year, which occurs in the first week of February.
One indication of what the financial sector is expecting from the RBA was clearly demonstrated in the monthly survey of economists conducted by Bloomberg. Their December survey, which covered 22 economists around the country, found that 18 of them expected that the RBA would cut Australia’s cash rate to 0.5 per cent next month.
Another key indicator of likely movement in official interest rates can be seen in the Australian Interbank Futures market, where financial dealers make trades based on their expectations of future economic activity. Up until late December, activity in this market was indicating that there was a 40% chance of a cut to official interest rates in February. However, after the impact of the recent bushfires, along with general global uncertainty brought about by increased tensions in the Middle East, the likelihood of a rate cut has increased to around 65%.
Of course, if you are in the market for a home loan as part of purchasing your next home, or simply looking at refinancing your existing loan, we would always recommend speaking to an experienced, independent mortgage broker before you sign on the dotted line. No matter who you currently bank with, a broker can assist you by finding the best available deal, (even from your existing bank), and they can also ensure that your loan includes the features that best suit your future plans.
Don’t forget, if our current low interest rates have got you wondering if this is the right time to sell and move on to the next stage of your property journey, there is no substitute for experienced property advice. So why not give one of the Barry Plant team at Taylors Lakes and Caroline Springs a call on 9390 8333.
Regards,
James Hatzimoisis & John Aaron Nakic
Directors – Barry Plant Real Estate
Taylors Lakes, St Albans & Caroline Springs