As per general expectations the RBA held interest rates in early February, opting to keep the 0.75% cash rate on hold for this month.
The statement of Governor Lowe was surprisingly upbeat. He is confident of continued economic growth at reasonable levels and a strong labour market – and he is pleased to see the weaker AUD being supportive of Australian export industries.
The short-term negative GDP impact of the bush fires is being balanced out by the positive longer-term expected spending in construction and labour as part of the rebuild process. The new issue of Coronavirus is an additional consideration for the RBA as the impact on China and global economic outlooks becomes more clear. (For more information on Coronavirus and its economic impacts please read our article in this newsletter.)
The final message of the RBA is consistent with other economist forecasts in that further cash rate cuts are to be expected later in the year.
The cash rate sentiment of lower interest rates is allowing strong credit borrowers with low loan-to-value ratios access rates of 2.84% and less for both variable and medium-term fixed rates.
There has been an increase in activity for owner-occupier lending as the banks seem keen to attract this business. Less activity is currently seen in investor lending however rates are becoming more competitive (around 3%) which may spark more interest in this market.
As mentioned in recent lending updates, the positive credit environment is now in place with all lenders lodging the repayment behaviours of borrowers with the credit agencies. It’s important to be aware of this sharing of information as it may impact your borrowing position. Checking your credit report before applying for finance may help you prepare Please contact the Infocus Lending Advisory if you would like assistance accessing and understanding your credit report.