Perth, WA - The statement released by Governor Glenn Stevens remained neutral in tone and indicated that global rates were likely to remain steady in the interim. Growth predictions for Australia remain a little subdued, and thus an accommodative money policy is required to help encourage growth.
Stevens further noted that although house prices continue to rise, the rate of growth has slowed in comparison to the previous year.
Economists Predict 2015 Rate Hike
Whilst rates remain unchanged for now, 9 out of 15 economists surveyed by APP predicted a rate hike in early 2015. This would be the first rise in over four years.
HSBC Australia chief economist Paul Bloxham believes that the current maintained rate is designed to compensate for the lost pace of growth in the June quarter, which was affected by consumer reaction to the government budget and an inevitable slowing of growth from the pace seen in the early months of 2014.
Home Loan Rate War
In response to the low interest rates, from July big lenders began to slash rates on their mortgage deals, with rates on 5 year fixed home loan rates to 4.99%. Many smaller financial providers are also undercutting the big banks on their deals.
For home owners, now is a good time to be looking for better deals ahead of the predicted rate hike. Jamie McPhee, chief executive of ME Bank, stated that now is a “great time” to fix home loans, as variable rates reach the bottom of the cycle.
Locking into a fixed-rate mortgage now will provide security in years to come.
Analysts, however, also urged caution. Whilst rates are presently attractive for first time buyers, careful budgeting is needed to prepared for the coming rise. Over-stretching a budget now to enter the market will simply produce problems further down the line.
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