Record Low Interest Rates


Interest rates have hit a record low with a second cut since May reducing the official RBA rate to 1.50%.

According to the REA this cut was due to inflation results, rather than the housing industry.

The annual inflation rate of 1% is lower than the RBA target of between 2 and 3%.

Other economic indicators remain positive – GDP growth is steady at 3.2% and unemployment is 5.7%.

The cuts are predicted to allow more investment in property despite rising prices in markets.

Experts believe we are now likely to see rates hit new lows of less than 3.5%, with rates of 4% becoming the new norm.

Lenders may not pass on the cut in full due to it being a consecutive reduction; in turn they may decide to keep it for themselves.

Figures from the Housing Industry Association’s home sales data show that in June 2016 sales of new homes were up by 8.2%.

This is depicting steady building activity and decent demand for home building.

While detached house sales were slightly down in South Australia and Western Australia, they were up by 17% in Victoria, and 7.1% in Queensland.

Ultimately this low-interest rate environment is benefitting Australians looking to buy investment properties and shows health in the industry.

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