For the first time since 2011, the Reserve Bank of Australia has declared a Cup Day cut. As the nation tuned in for the Melbourne Cup on Tuesday, the RBA announced the official cash rate cut by 15 basis points to a new historic low of 0.10%, as the economy begins to rebound from the impacts of Covid-19.
RBA Governor Philip Lowe said the Board decided on a package of further measures to support job creation and the recovery of the Australian economy post-pandemic. Mr Lowe said in his statement on Tuesday that “with Australia facing a period of high unemployment, the Reserve Bank is committed to doing what it can do to support the creation of jobs”.
So what does the rate decision mean for homeowners?
The rate cut is great news for borrowers, provided banks pass it on to their customers. Sam Boer, the CRO of Smartline Mortgage Advisors strongly recommends borrowers putting the extra cash on your mortgage. “I suggest taking advantage of these remarkably low rates and paying off as much as you can – the interest you will save over the long term is significant”.
Find out from your bank or mortgage advisor if they can get you a better rate by refinancing.
What does the cut mean for first-home buyers?
The rate but would likely allow first-home buyers to borrow that bit extra, which could be the difference between getting the home they want, and having to compromise.
Banks are even more competitive for your business now, so buyers are in a good position to look around and find the loan that suits them best.
Is now a good time to buy property?
According to the Finder survey, 71% of expert respondents expected house prices to rise in both Melbourne and Sydney over the next two years, while 69% expected prices to increase nationally during the same period.
Looking at our local market, the Sunshine Coast has recorded consistent dwelling price growth for both houses and units, while simultaneously, population growth in the region is at its highest level in almost a decade, CBRE research shows.
The Sunshine Coast’s median house price increased by 3.8 per cent to $622,500 in the year to June 2020, and its median unit price recorded 2.4 per cent growth to $420,000.
CBRE notes that the annual rates of growth were higher than the Gold Coast—3.1 per cent and 1.7 per cent respectively—and the Greater Brisbane area, which grew 1.3 per cent and 1.7 per cent respectively.