Will the RBA lower interest rates?

In 2018, the thought of the Reserve Bank cutting interest rates to a record low of 1.25% was laughable to some investors. Fast-forward to 2019 and money markets are now predicting a greater than 50/50 chance that RBA governor Philip Lowe will be announcing a rate cut by the time the year is out. While property-owners may jump for joy, the RBA has expressed concern in the past that reducing rates may encourage households to take on more debt in order to embed themselves in the property market. So what happened to change the state of play so dramatically?

Will the RBA lower interest rates?

There are a number of international and domestic factors in play:

Hesitations by the RBA to lower rates may lessen in the wake of the banking royal commission and a climate where macroprudential lending restrictions have already cooled the supply and demand of property lending. With inflation failing to clear the RBA’s target for 12 of the last 14 quarters, and without continued improvement, it may prompt an RBA move for the first time in two and a half years since rates were last lowered to 1.50% in August 2016. Whether it’s flailing inflation rates or declining business sentiment, it indicates a slowing economy and therefore burgeoning pressure on the RBA to act.

It’s important in the current unpredictable landscape to partner with a broker who is there to advocate for you. Using a broker means you get things right the first time with the benefit of their expertise of the current lending landscape and their support for the life of your home loan. Whether you’re thinking of purchasing, ready to apply or wanting to refinance, FundingPro can guide you through the process. Talk to one of our home lending specialists on 1300 898 765 or apply here.