Vicky McLoughlin No Comments

The Reserve Bank of Australia made the decision today to leave the cash rate unchanged at 1.5%.

In making this decision the RBA looks to have taken into account the lack of economic growth in Australia, evidenced by the continuing fall in house prices, a rise in mortgage arrears and a drop in the number of dwelling approvals in July.

The move to leave the cash rate on hold, rather than decrease rates, has been debated by some of Australia’s leading economists, with many Australians recently subjected to ‘out of cycle’ rate increases. This means that lenders have increased their rates independently of the Reserve Bank – activity we saw just last week with a large number of Australia’s lenders raising their rates and others tipped to follow suit.

Australian lenders are confronting the same dynamics of rising funding costs and a weakening lending market. Regulatory changes designed to strengthen the banking system have also seen the amount of capital lenders are required to hold increase, which means that they have had to look to more expensive sources, rather than their own balance sheets to fund loans.

It is important to review your lending options regularly to ensure that they remain the most suitable for your situation. Please don’t hesitate to contact us to discuss this.

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