Interest Rates – Next move is downwards.

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Interest Rates – next move is downwards!

 

The release of the Reserve Bank’s (RBA) minutes recently made it abundantly clear that the next interest rate move will be down – the only question is when.

In its minutes, the RBA said “that further easing over the period ahead may be appropriate to foster sustainable growth.”

But it is not just the RBA that is generating ultra-low home loan rates, research just released by Digital Finance Analytics shows that since January, banks have been heavily discounting interest rates. The average discount is 1 per cent, but the best discounts are 1.3 per cent.

Good news for home owners? Probably – especially if you have a home loan.

But, is the economy getting so bad that the Reserve will have to drop rates to avoid a recession? The RBA’s Governor does not think so. In a recent speech he said, “If we have a period of sub-average growth in the process, we will have done far, far better than in any previous event of this kind. I still think that is the most likely outcome.”

If the Australian Prudential Regulatory Authority can achieve its goal of avoiding a property bubble, the property market may achieve Goldilocks status – neither too hot nor too cold.

Graeme Salt – National Client Finance Manager, Chan & Naylor Finance Australia

Graeme Salt

Disclaimer: This article contains general information. Before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs.

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