The Reserve Bank of Australia has offered a welcome boost to homeowners and businesses this afternoon when it chose lower interest rates by 0.25%. The cash rate now sits at the all-time low of 2.25%.
While the news may have mortgage holders celebrating, there are also other reasons for cheer, including signs that the Australian economy is steady and the housing market is booming, particularly in capital cities.
“Home prices are at record highs across Australia and annual price growth of 8 per cent remains well above the long-term average growth rate of 4.8 per cent.” Says CommSec’s chief economist Craig James.
Melbourne and Sydney house prices continue to be on the rise, says CoreLogic head of research Tim Lawless. “From January 2009 through January 2015 Sydney home values have increased by 57 per cent,” Melbourne’s housing values followed with a 50 per cent increase over those years.
Lower prices equals lower interest rates
Families around Australia will also be benefiting from low petrol prices – in fact, a Deutsche Bank economist recently stated that “lower petrol prices are putting the equivalent of two rate cuts worth of savings into the pockets of households.”
With interest rates falling and the continuing slide in the Australian dollar, though not great news for people travelling overseas, it’s a boost to the economy, with the RBA confident that it’s now sitting approximately where it should be.
Add to that a strengthening credit growth, solid retail sales and ongoing job growth – topped off with another possible cut to rates in the coming months – and 2015 is set to be a good year for families and mortgage holders.
If you want to prepare for a bumper year with the lowest interest rates ever, please don’t hesitate to call us – we’re here to help.