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Following the most recent Reserve Bank meeting earlier this month, it is being widely interpreted that the official cash rate is likely to stay on hold until late 2019 (Bill Evans, Westpac Chief Economist. There are now even interpretations of rates on hold until late 2020. ClickHere

The factors in play: the exuberance of regulators (APRA / ASIC) have done all of the Reserve Bank’s heavy lifting. The Royal Commission is causing banks to pull back even further. The Treasurer now mentions an “unintended” credit tightening.

Is this bad news? It all depends on perspective. The Reserve Bank tends to work “counter cycle”.

  • If consumers are pulling back the Reserve Bank will attempt to create (moderate) excitement with lower rates.
  • If consumers are being too exuberant they dampen demand with higher rates.

What we have now though is both lenders and consumers pulling back so the Reserve Bank has signaled that it will keep rates on hold as far as the eye can see.

What does it mean for you?

  • If you have an owner occupied loan – interest rates (apart from minor changes that banks may add due to their own funding costs) are going nowhere. Use this as a time to get ahead.
  • If you have an investment loan – and intend to hold the property – you should be talking to me about switching to P&I to lower your rate and start paying the loan down.
  • If you intend to buy – the heat is out of the market. You should also be working “counter cycle”…Now is the time to buy.

On investment – this is the area hardest hit at the moment and I have been given the most spectacular offer in the market to give my own clients. It’s so good I have been told I cannot mention the interest rate publicly – please contact me for information.

As always if you’d like to know more or would like advice tailored to your own personal circumstances, just Ask Alan – Your online mortgage broker.