The financial commitment to your new custom luxury home design in Perth just got that little bit easier, as the Reserve Bank of Australia (RBA) announced this week that the cash rate will remain at 2 per cent. The current record low was deemed appropriate when the board met on Tuesday June 2, with space to manoeuvre built into the Governor’s announcement.
Australia isn’t the only country with a low rate at the moment, with the USA and other major countries maintaining fairly accommodative stances towards monetary policy. However, the RBA does anticipate the American interest rate to increase later in the year. If this move eventuates, our economy could benefit from increased demand in the US and changes in our standing to the US Dollar.
In a fairly vague statement, the RBA alluded to monitoring developments in the economy before deciding whether or not the current setting should remain. Of course, for those with luxury homes the real opportunity is to reduce the capital owing on their mortgages while variable rates are low. Whether the next move is up or down, the cost of finance will become more expensive at some point in the future as the economy improves. This means making the most of the low interest environment now should be a priority.
If you’re wondering how much of an effect falling interest rates actually have, the Real Estate Institute of Australia (REIA) has released research showing that affordability of housing has increased across the country in the first quarter of the year. During the three month period, families went from spending 31.5 per cent of their disposable income on home loans, to 30.8 per cent.
However, affordability is still not as good as it was last year, reports the REIA, suggesting that there is still room for improvement. The Housing Industry Association anticipates that low rates will be on the cards for the coming months, creating a great opportunity for those looking to reduce their home loan as much as possible, or take on new finance for a custom home design.