Australia’s interest rate remains on hold at the historic low of 0.10 per cent.
The Reserve Bank of Australia (RBA) today met to decide the nation’s official cash rate, choosing to keep it on hold at record-low levels as the country continues to battle the COVID-19 pandemic.
The central bank has long advised that it will not increase the cash rate until inflation rises to a sustainable target of two to three per cent.
Currently inflation is around 1.75 per cent.
In his monetary statement, RBA Governor Philip Lowe noted the impact extended COVID-19 lockdowns are having on large parts of the country.
“The recovery in the Australian economy has, however, been interrupted by the Delta outbreak and the associated restrictions on activity,” Mr Lowe wrote.
“GDP is expected to decline materially in the September quarter and the unemployment rate will move higher over coming months. While the outbreak is affecting most parts of the economy, the impact is uneven, with some areas facing very difficult conditions while others are continuing to grow strongly.”
Two years ago, in September 2019, Australia’s interest rate was sitting at a square 1 per cent.
In October 2019, it was dropped to 0.75 per cent. In March 2020, as the COVID-19 pandemic hit, the RBA made two emergency rate cuts to inspire more lending, dropping the cash rate to 0.25 per cent.
Finally in November 2020, interest rates hit a rock bottom of 0.10 per cent.
Speaking ahead of today’s RBA announcement, Compare the Market’s digital banking expert David Ruddiman said changes in the official cash rate are being closely watched by new entrants into the property market.
Many people are looking to implement a strategy to provide a safeguard against future rate rises,” Mr Ruddiman.
“This could mean splitting their home loan into a fixed interest component and a variable interest component that enables them to make additional contributions to pay down their home loan faster while rates are at historic lows.
“This provides borrowers the best of both worlds; stability and predictability of repayments on the fixed component, with the flexibility of being able to focus their repayment efforts on the variable component.
“There has never been a better time for those with a mortgage to consider meeting with a mortgage broker to review their home loan and lock-in thousands of dollars in potential savings.”
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