The Reserve Bank has cut official interest rates by 25 basis points to a fresh record low of 2 per cent, a fresh injection into the Australian economy and particularly the housing market.
If passed on in full by Australia’s “Big 4” banks, this will indicate significant savings – approximately $60 per month on a $400,000 loan – much needed cash in the pocket for many Australians.
For first home buyers, this is a perfect time to consider your borrowing power and enter the property market. For existing homeowners, it may be time to refinance their current home loan with home loan rates of below 4% being offered.
In its meeting on 5th May, the Reserve Bank of Australia stated “Low interest rates are acting to support borrowing and spending…. growth in lending to the housing market has been steady over recent months. Dwelling prices continue to rise strongly in Sydney”.
The question on most borrowers mind is whether your current lender will pass on the full interest rate cut. Australia’s biggest bank – Commonwealth Bank of Australia elected to pass on 20 basis points of the 25 basis points RBA cut. Whereas ANZ decided to pass on the full 25 basis points. This is a perfect time for CBA customers to either put pressure on CBA for a pricing review or contact their mortgage broker for a more competitive rate, after all Redwood Home Loans are achieving rates of less than 4% in the current variable rate market.
Low interest rates and property prices
During April 2015, property prices across most capital cities continued to rise. According to RP Data, auction clearance rates are at record rates in Sydney and Melbourne and home value index across capital cities. Lower interest rates will stimulate economic growth and provide further stimulation in Australia’s real estate market. Existing investors will look to increase their borrowing power to invest more and first time homebuyers to take their first step into Australia’s heated property market. One thing is for sure, the ‘bubble will not pop any time soon.
With interest rates at record lows and tremendous competition in the lending market, it’s a perfect time to talk to your Redwood Home Loans broker, whether its your first home, refinancing or investment property get the right home loan advice.
Whatever you are looking for, Redwood Home Loans makes investing in your first home or refinancing your home loan easy with interest rates from 3.99%, contact us today on 1300 790 110 for a free, no obligation consultation.