Well here we are, it’s almost Christmas! Today’s Reserve Bank meeting was the last for the year, and the board decided to leave interest rates unchanged (Media Release/2013).

The RBA statement continues to note a mixed outlook, with growth still below trend, unemployment edging higher, and weak public spending expected. However household and business sentiment is improving, demand for finance by households is increasing and retail sales are growing.

At this stage it seems the RBA’s biggest concern is the Australian dollar, which remains “uncomfortably high”. The Reserve Bank would prefer for economic growth to be driven by a weaker dollar rather than further rate decreases and they have made a number of speeches in the past month to this effect.

With the official cash rate on hold, home loan variable rates are expected to be stable however a number of lenders are starting to put up their 3 and 5 year fixed rates. Contact us at Golden Eggs Home Loans today if you would like to look into at refinancing to take advantage of the current low rates.


The Reserve Bank had their monthly meeting and have left
interest rates on hold (Media Release/2013).

The notes that follow the announcement had a new comment that “public spending
is forecast to be quite weak”. They also remark that “a lower level of the
exchange rate is likely to be needed to achieve balanced growth in the
economy”. Much as I am hesitant to make any forecasts, I can’t see rates being
lifted while this is the case and while inflation is expected to remain within
target for the next one to two years.

I have received some questions about the relationship between the RBA rate and
the rates that you pay on your home and investment loans, so look out for my
next newsletter which will have some more information for those that are
interested. I love getting questions, so if you have any queries of a general
nature or related to your personal situation, please let me know.

Call or email us today to find out more.

Rates on Hold – October 2013 RBA Announcement

As always on the first Tuesday of the month (except January), the Reserve Bank of Australia (RBA) Board meet to determine the cash rate. As
widely anticipated, today they decided to leave the cash rate unchanged at 2.5 per cent (Media Release.2013).

With consumer and business confidence edging higher, and the property market recovering (in some areas more quickly than others), the expectation is that the RBA will continue to watch for further signs that previous cuts are having an impact on stimulating the economy.

You may have seen commentary in the past month discussing whether we are in a property bubble, particularly with the Sydney and Melbourne markets running hot. The RBA commented in mid September that this does not necessarily constitute a bubble, and that house prices have risen at a rate equivalent to or on average less than the growth of household incomes. Interestingly though, the RBA statement today does have a masked warning that “there is ample funding for creditworthy borrowers” (my emphasis), which is consistent with their recent public caution to banks to maintain standards when approving loans. In a low rate environment, it is important to also consider loan affordability with a buffer for when rates inevitably rise. At Golden Eggs Home Loans, we discuss this with all clients.

As to the future, there are a number of indicators still slowing the economy and the RBA note that “they will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes as consistent with the target”.

Call or email us today to find out more.

No change to rates – September 2013 RBA Announcement

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 (Media Release/2013)

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.

Rate Decrease of .25% – RBA Announcement for August 2013

Rate Decrease of .25% – RBA Announcement for August 2013

As was widely anticipated by surveyed economists, the Reserve Bank of Australia announced a decrease of 0.25% (Media Release/2013), taking the cash rate to a low of 2.5%.

Governor Glenn Stevens had hinted at this in a speech last week, and today’s announcement notes that recent information on prices and activity were the impetus for the lowering of the cash rate. Unemployment has edged higher (and the latest mini-budget forecasts that trend to continue for the next one to two years), and with headline inflation weaker than expected, the RBA hopes to support demand and build business confidence and investment.

It is expected that the banks will to pass on all of the decrease due to lower funding costs.

If you would like to discuss what this means for you, please contact us