While the Reserve Bank insists on keeping the official cash rate on hold, there is every sign that some major banks will reduce standard variable mortgage rates by at least 0.5 percent.
This is great news for anyone just about to meet their mortgage broker in Kwinana, Rockingham, Baldivis or surrounding areas. With the residential property market moving well at the moment, any movement by one of the major banks could start a discounting war amongst the rest. The winners are most likely to be people taking out a new mortgage in the near future.
It is most unusual for cuts in interest rates for mortgages, especially the standard variable rate, when the Reserve Bank keeps interest on savings level. The Reserve Bank, however, will take into account any out of cycle reductions when they next meet to consider cuts in the future.
Banks Willing to Discount Rates
To reduce mortgage rates, by offering discounts, the banks show that they are in the mood to gain new business in recent months to stimulate the market by reducing interest rates out of cycle; the cuts are seen as voluntary rather than mandatory.
The banks are able to offer these discounts because they are expected to keep these new customers over the long term, motivating more business in the mortgage market and residential sales and rental properties should see the housing market moving even quicker.
Some members of the Reserve Bank are unsure of future plans with the usual cash savings rate, believing that rates may decrease within the next 12 months. The board that sits to review the cash savings rate is closely split with five out of the nine expecting additional cuts during this year.
During the past month, the banks are seeing that low interest rates are helping to move the housing market as consumers are finally feeling realistic about purchasing property again after the long recession. On this news, the share markets in Australia have risen to their highest levels for the past 4 ½ years.
A Good Time to Visit Your Home Loans Provider
If the cash savings rate is to fall lower, mortgage rates will fall to at least match it. This means that people will be able to purchase homes at a much more reasonable interest rate which allows the mortgage market to work well for consumers.
When you require home loans in Kwinana, Baldivis or Rockingham, seeking a professional mortgage broker’s advice will guide you as to a sensible amount that you can comfortably borrow as you take your own place moving up the mortgage ladder.