The backbone of all profit making in the financial market is interest rate. It is that very thing that makes all the difference in the end both to the lender and the borrower. The lender’s goal is to make as much profit as possible, while the borrower wants to ensure prompt repayments so as to minimise how much interest they have to pay back. Low interest rates are a great incentive for people to borrow more. Ultimately the greater the number of borrowers, the better that is for the overall economy.
The tricky thing is that interest rates are an invariably fluctuating for a variety of reasons. Without going into details, the factors influencing these variations in interest rates are wide ranging. One of the key factors is what the Australia’s RBA (Reserve Bank of Australia) decides to do, which in itself is a reflection of how the national economy is doing.
In Australia’s case, since 2011, the Reserve Bank of Australia has cut interest rates several times. Presently standing at an all-time low of 2.75%, this drop is expected to spur activity in the struggling parts of the economy, most notably retail sales, construction and housing.
Interest rates in Australia are expected to fall even further as the nation’s central bank decides to encourage further mining investment. Some forecasts predict a drop of 2.0%. Last year, over 60% of Australia’s economic growth resulted from the mining boom. As a result of recent Carbon and Mining Taxes have been said by pundits to have slowed down the economic growth, mining firms are finding themselves forced to pursue measures of austerity.
It is believed by the Reserve Bank of Australia’s board that this reluctance to spend will leave a short term hole in the national economy that will need to be filled. These interest rate cuts are a measure of support for domestic growth including non-mining business investment, general household consumption and housing construction.
This basically means that right now is a great time to get a home loan for first home buyers and others alike. Just as well, this makes it easier for us here at SwitchMyLoan to find you a better deal on your existing home loan if you already have one!
Visit www.switchmyloan.com.au or call 1300 307 155 today to see what rate you can achieve!
Call 1300 307 155 and start saving today!
Latest posts by Matt Ikin (see all)
- Variable vs Fixed Home Loans – Which one is right for me? - December 5, 2014
- Mortgage Tips for Borrowers - November 20, 2014
- 5 Hot Tips for Getting the Most from Your Home Open - October 8, 2014