Australian interest rate remains unchanged at historically low 0.1%
In his monetary statement, RBA Governor Philip Lowe noted rising house prices but maintained that inflation was not yet high enough to warrant a hike in interest rates.
“House prices continue to rise, although turnover in some markets has declined as a result of the virus outbreak,” Lowe said.
“The growth of home loans has accelerated due to increased demand for credit from homeowners and investors. The Board of Financial Regulators discussed the medium-term risks to macroeconomic stability of rapid credit growth in an era of historically low interest rates.
“In this environment, it is important that lending standards are maintained and that loan sustainability cushions are appropriate.”
In a speech two weeks ago, RBA Deputy Governor Michele Bullock said the central bank was forced to cut rates as an economic driver during COVID-19.
“The Reserve Bank has reduced interest rates to historically low levels and introduced a series of other policy measures to reduce financing costs and interest rates throughout the economy,” he said. Mrs Bullock said.
“Banks have offered loan repayments deferrals to borrowers. There were moratoriums on evictions and rent relief for businesses and households.
“The idea was that we build a bridge to allow us to cross the economic crevasse created by the pandemic.”
Although interest rates have held steady at 0.1% since November 2020, the true out-of-pocket cost of Australian mortgages can change over time.
Finder’s head of consumer research, Graham Cooke, said borrowers are responsible for finding the best deal.
“RBA data shows banks changed rates seven times in the last stable period. Four of those changes were rate hikes – they may well do it again,” Cooke said.
“Those without a fixed mortgage rate should remain alert to any changes in their bank, as it could mean significantly higher monthly repayments.”
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