As everyone looking for a home loan in Rockingham, Baldivis and Kwinana has already heard 100 times, the RBA has held the interest rate at 2.5% for another month. This news was expected—what we are more concerned about is where interest rates are going from here.
The ASX (Australian Stock Exchange) futures market reacted to the news by saying that there may be another rate cut in the future. They also foresee that the cash rate will start lifting in the middle of next year.
While an increase in the cash rate could result in a surge in variable home loan rates, there is good news, too. Usually, a rising cash rate means that the economy is improving. Hopefully, it will also indicate a decrease in the unemployment rate.
The Big Question
Interest rates have been on a cascading cycle for the better part of 4 years. The main question for now is, “how much lower can they go before they start their inevitable rise?”
According to Craig James, Chief Economist of the CBA, the fixed term interest rate market already appears to be directing upwards. At this point, we haven’t seen any evidence of this change showing up in the retail rates but we will definitely let you know if they start to lift.
The RBA did leave the door open to further interest rate cuts, stating that the bank should neither shut off the likelihood of a further rate cut nor signal a probable intention to reduce them.
However, they also displayed a sense of optimism about the economy, which would signal an eventual rise in interest rates. They noted that house prices had increased along with turnover. They also stated an opinion that leading indicators are pointing toward a rise in the housing market soon.
When combined with positive news about the global economy and indications of a rise in demand for credit, this would signal an eventual rise in the rates coming as early as the second quarter of 2014.
Talk to Smartline Mortgage Brokers Rockingham
We don’t think it is wise to wait much longer. If you are thinking about a home loan in the Rockingham, Kwinana or Baldivis area, visit our office or call us: 0408 912 244.