In a move many expected, the Reserve Bank has this week lowered the official cash rate to 0.75%, hopeful it will help stimulate employment and income growth, set against a backdrop of improving housing markets in both Sydney and Melbourne.
The decision, which was largely anticipated, marks a third cut in less than four months since the RBA first took action to lower rates back in June.
In a statement accompanying the decision, RBA Governor Philip Lowe said:
While the outlook for the global economy remains reasonable, the risks are tilted to the downside. The US–China trade and technology disputes are affecting international trade flows and investment as businesses scale back spending plans because of the increased uncertainty.
A gentle turning point, however, appears to have been reached with economic growth a little higher over the first half of this year than over the second half of 2018. The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, signs of stabilisation in some established housing markets and a brighter outlook for the resources sector should all support growth.
There are further signs of a turnaround in established housing markets, especially in Sydney and Melbourne. In contrast, new dwelling activity has weakened and growth in housing credit remains low.
The Board took the decision to lower interest rates further this week to support employment and income growth and to provide greater confidence that inflation will be consistent with the medium-term target.
It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target. The Board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time.
The new standard variable rate for home loans will take effect on 22 October.
With home loan rates falling all around, now could be perfect time to get your foot in the door of the property market. If you already have a home loan it could be the prime time to refinance your current deal to a better value offer. Before purchasing any new piece of property, be sure to book a pre-purchase inspection with Your Building Inspector.
You can find RBA Governor Philip Lowe’s full statement here https://www.rba.gov.au/media-releases/2019/mr-19-27.html