At its August meeting, the Reserve Bank of Australia (RBA) decided to cut the official cash rate by 25 basis points to just 1.50 per cent. This follows a rate cut in May this year, bringing the official cash rate to its lowest point ever on record! The RBA has indicated that it’s now waiting for more information regarding global currency market activity before it will decide if further cuts to the cash rate will be necessary in 2016.
This month’s move was prompted by low inflation figures for the June quarter, which indicated a weakening trend, well under the RBA’s target range of 2 per cent. The Australian dollar also remains stubbornly high compared to other currencies, which tends to have a dampening effect on the economy.
Property market activity has cooled during winter, which is traditionally the case for this time of year. For the week ending July 31, Victoria’s auction market was the strongest, with 754 scheduled auctions and a clearance rate of 75 per cent. NSW held 509 auctions with a clearance rate of 78 per cent. Queensland only scheduled 156 auctions and the clearance rate was quite low at just 49 per cent. South Australia had 107 auctions and a clearance rate of 69 per cent. Western Australia scheduled 34 auctions and achieved a clearance rate of only 37 per cent. Northern Territory had only 8 auctions and a clearance rate of just 25 per cent. ACT held 43 auctions, with a clearance rate of 74 per cent and whilst Tasmania held 7 auctions, none of the properties registered as sold.
With the overall weakening of property sales during winter, home value increases have also slowed. The biggest increase for the month was in Adelaide, where home values rose 1.42 per cent. Home values in Sydney increased by 1.25 per cent, in Hobart by 1.12 per cent and in Melbourne, 1.11 per cent. All other markets showed very marginal decreases in home values, except for Darwin where there was a significant drop of 6.18 per cent.
This month’s cash rate cut, combined with the decline in market activity for winter, has stimulated lenders to offer some extremely competitive interest rates and great special offers. Smaller lenders have passed on the full rate cut, so if you’ve been waiting for the right time to refinance your home loan or fix your interest rate, then this could be it! We can also access great rates for first home buyers, next home buyers and property investors, so give us a call now to check out what we can do for you and find out how much money you could save.