Predictions rang true again this month when it came to baseline lending, with the Reserve Bank of Australia voting to keep official cash interest rates steady at 2.50%, the longest rate hold since 1990.
While there was widespread concern over what impact the unveiling of the May federal budget would have on the economy, consumer sentiment has not continued to decline over the past month.
In fact, the Bank for International Settlements says Australia’s major banks are the most profitable in the developed world.
Stephen Munchenberg, Chief Executive of the Australian Bankers’ Association, says the profitability of Australia’s Big 4 shows the relatively good position of the Australian economy.
“We’ve got stronger economic growth and we’ve got lower unemployment than a lot of countries,” he said.
The Australian recently reported that our economy is now growing more quickly than the US, UK, or New Zealand on an annualised basis.
Construction boom based on low interest rates
Construction played a big part in first quarter economic growth caused by a boom in home building brought about by the sustained low interest rates.
House prices in Sydney and Melbourne made a record comeback in the months of June, with particularly high levels of auction activity for the winter months. House prices in Brisbane and WA also increased during June.
If you’ve been thinking about downsizing, upsizing or investing, perhaps now with interest rates at historic lows, is the time to look at your options. As always, we’re here to share our expertise with you, so give us an obligation-free call.
Until next month,