Recent financial news has had many experts scratching their head and wondering what the future of Australia looks like.
With the RBA official interest rate cuts affecting multiple aspects of Australia’s financial landscape, there have been a number of changes that may affect you and your financial goals.
So, in order to help you understand these changes and their implications better, we’ve taken the time to break down some of the most heated topics potentially affecting your financial world in this Q&A.
The questions and topics we cover in this Q&A include:
- The recent interest rate cuts and what they mean for you
- Whether to keep or sell your current property when purchasing another
What The RBA’s Official Interest Rate Cut Means For You
On the 2nd of July 2019, the board of the Reserve Bank of Australia (RBA) voted to officially cut the cash interest rate by 0.25 percentage points to 1%, a historic low for Australia. This was following an earlier cut in June, which marked the first change in official interest rates in nearly three years.
The idea behind this cut was simple: to help boost a struggling economy and property market and make it easier for younger Australians to achieve their home ownership goals. The big four banks jumped on board with this idea shortly after it was announced, promising to reduce their standard variable rate loans for owner-occupiers paying principal and interest by varying degrees.
But while the big four banks have agreed to pass on the interest rate cuts in some form to their customers, the same can’t be said for every other financial institution. If you have a home loan and would like a lowered rate, whether you’ll be eligible to receive this will depend largely on which lender you’re with and the fine-print of your loan agreement.
Like many aspects of your financial world, what the interest rate cuts mean for you will be different depending on your personal financial circumstances and goals. There are some clear winners of the cuts, such as those who currently have a loan with a bank which has promised to pass on the benefits of the cuts or those seeking to purchase their first home. But there are also those who may find the interest rate cuts a challenge, such as those with large amounts of savings in cash or term deposits or those with fixed rate loans.