RBA Keeps Record Cash Rate Low

Lowered unemployment and upticks in inflation rates helped the Reserve Bank of Australia keep its 0.75% cash rate on hold. The RBA anticipates a rise in market activity this year as the region sees more listings return to the market.

Brokers held off from listing and end-2019 but slowly came back for January 2020.

According to Loan Market executive chairman Sam White, this surge will push investors to seek out brokers. This comes along with the introduction of Best Interest Duties.

White believes RBA’s decision symbolizes confidence in its economy.

RBA’s cash decision on their monthly cash rate carries different effects for borrowers and deposit holders in Australia. Cansar’s group executive of financial services, Steve Mickenbecker, claims this will benefit the latter.

Steady cash rates would please Australian savers who were impacted in the last two weeks with two banks cutting savings rates. ANZ’s base servings rate went down to 0.05%.

Mortgage can leverage the situation, while savers are in a comparably low-rate environment. As of now, borrows should be prepared to move their loans and lobby their banks for a better deal.

RBA’s Impact on Australian Homes

Head of research at CoreLogic Tim Lawless wants a cut from the RBA later in the year. Lower interest rates stimulated the home sector, although these failed to lead improvements in economic conditions.

National housing values rose 6.7% since the first-rate cut in June through the end of January.

Early signs of strength in the market are seeping into other sectors. Mortgage commitments rose by 5.9% through November from a 10% increase in owner-occupier commitments.

Evidently, Mickenbecker advises against this.

He claims further rate cuts wouldn’t affect anything other than Sydney and Melbourne real estate. Banks would unlikely pass on cuts of more than 0.51% as homeowners use this to pay home loans overspending.