Blog: Cash rate stays at historic low level
The Reserve Bank has ruled to keep the cash rate at 2.5 per cent, which is good news for property buyers.
Savings made by banks when the cash rate is lowered are generally passed on to consumers through a reduction in their home loan repayments, making it more affordable to get on the property ladder.
The cash rate has seen reductions since late 2011 but the full effects of the cuts have yet to be realised and may take awhile, according to Reserve Bank Governor Glenn Stevens.
This indicates the cash rate could remain low to encourage consumer spending in order to boost the economy.
The low rate has contributed to make houses the most affordable they have been in a decade, according to CEO of Real Estate Institute of Australia, Amanda Lynch.
"Nationally, it now takes 28.7 per cent of the median family income to meet average loan repayments," she said.
The cash rate is the lowest it has been in 60 years and if economists predictions are right, the next few months will be a great time to consider purchasing property.
Ms Lynch said it would be best if rates remain low to ensure buyers remain confident about the property market and boost the building industry.
Inflation is in line with targets and there has been an improvement in household and business sentiment recently, according to Reserve Bank Governor Glenn Stevens
"Long-term interest rates remain very low and there is ample funding available for creditworthy borrowers," he said.
In order to get the best deal on a home loan to fit your needs, you may want to talk to a mortgage broker because they have access to a broader range of products and lenders, as well as insights into the property market.