The Royal Bank of Australia (RBA) met earlier this month (2 February 2021) and decided to leave interest rates unchanged at 0.10% where it has remained since November 2020. The RBA Governor Phillip Lowe said the economic recovery was faster than expected but the outlook depends on the success of the vaccine and the maintenance of fiscal and monetary stimulus. This means it is unlikely to increase before 2024.

How does this affect you?

First-time buyers and personal loans

If you are looking for a mortgage and/ or finance, then this would be a great time to shop around for a good deal. Our mortgage broker Andrew can help you with that. You just need to be aware that mortgage lenders and banks will only pass on a partial cut. In the short term the home loan will be cheaper, however it is important not to stretch yourself and consider affordability when interest rates rise again. The advantage you have now is that the low interest rates are pinned for around another three years so you can plan.

Homeowners

The central bank will be keeping a close eye on house prices, lending growth and the impact of the pandemic. Keeping the interest rate cut, may boost property prices due to increased confidence and greater demand. Property investors should also be taking advantage of the low interest rates.

If you are on a variable mortgage, or have a part fixed, part variable mortgage, your monthly mortgage payment won’t go up. However, if you are on a fixed rate, it won’t go down due to the fixed rate clauses within your mortgage contract.

Trying to save?

Unfortunately, the decision to leave interest rates unchanged is bad news for savers. If you don’t think you are getting the best interest rate on your current savings account, then make sure you check other providers. There are many comparison websites to see what is being offered, just be careful of any fees associated with moving your money and if you have to deposit certain amounts per month to gain the increased interest rate.

If you have any questions, or would like to book an appointment with our mortgage broker and financial expert, Andrew Dalton, please get in touch by emailing: andrew@taxproaustralia.com.au or call 08 9240 7629.

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