The Reserve Bank of Australia (RBA) held their monthly board meeting today and have decided to leave the cash rate unchanged at 2.5 per cent (http://www.rba.gov.au/media-releases/2013/mr-13-17.html)
Most parameters appear relatively stable except global financial markets which have shown some volatility as the US considers tapering quantitative easing.
The RBA note that:
- Global growth is still below average but has ‘reasonable prospects’ of picking up next year
- Inflation in most countries remains ‘well contained’
- The Australian economy continues to grow below trend, but is as expected due to lower levels of mining investment
- The unemployment rate continues to edge slightly higher
- Previous rate decreases have supported interest-sensitive spending and asset values
- The Australian dollar depreciation has helped rebalance growth in the economy, and this will continue it the exchange rate depreciates further over time.
It appears that with no clear signs of deterioration or improvement, the RBA is taking a ‘watch and wait’ approach.
Variable rates are at historical lows and fixed rates even lower. For those with an existing mortgage, this is a good time to keep repayments the same, which will result in you paying down your loan more quickly. If you would like to know if your loan is still a good choice for you, please contact us. It is a competitive environment and the banks are vying for new business, so you may be able to make further savings. For example, one bank have just reduced all their variable rate loans by 0.22%, even though the Reserve Bank kept the cash rate steady. And a number of banks are offering rebates of between $700 and $1000 for loans refinanced from another lender. Call or email us today to find out more.