February 2012 Australian Reserve Bank Rate Announcement: How Will It Affect You?

7th OF February 2012

The Reserve Bank’s first meeting of 2012 has revealed that interest rates will be kept on hold for now. Economists believed the Reserve Bank would cut rates by 0.25 per cent as a result of concerns regarding Europe’s current economic climate. Following today’s meeting however, interest rates will remain at 4.25%.

What does this decision mean for mortgage holders?

Each quarter percent drop in interest rates, relieves Australian families of approx $60 off the monthly interest costs of the average mortgage, and without any movement in the rates today, families are burdened with continued high interest rates and are made to play the waiting game until the next Reserve Bank decision. If the Euro zone continues to see an unsteady economy, today’s decision leaves room for the Reserve Bank to cut rates in the next deciding meeting. Domain Property expert, Carolyn Boyd suggests that although there has been no movement in rates, mortgage holders should look into finding a better mortgage deal and possible rate cut by shopping around at different lenders. Some lenders are currently offering more than a 0.9% cut off the current standard variable rate to borrowers who enquire.

What does this decision mean for prospective buyers?

RESCU Real Estate & Property Expert, John McGrath suggests that although this time of uncertainty brings about fear, those who feel comfortable to take the property plunge could be significantly rewarded in the near future: “As always, when conditions aren’t great, there are amazing opportunities for those buyers brave enough to buy when others are holding back. The Australian property market has an outstanding track record for long-term capital growth. If you can get in at a time when a relatively large proportion of the market is holding back, you could do very well for yourself. As long as you do a careful budget with a buffer and buy with a view to holding the property ideally for 10 years or more, now is a fantastic time to buy.”

For more property advice, check out RESCU's resident real estate expert John Mc'Grath.

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