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Australian interest rates will remain at an all-time low of just 0.1% for the remainder of 2020 after the nation’s central bank decided not to cut the official cash rate further.

The Reserve Bank of Australia (RBA) cut rates to their lowest levels on Melbourne Cup day last month, saying they will likely keep the cash rate unchanged for up to three years.

Today, RBA Governor Philip Lowe in his monetary statement said the bank is doing everything it can to revive the nation from its current COVID-19 recession.

The Reserve Bank of Australia (RBA) cut rates to their lowest levels last month on Melbourne Cup day, saying that at that point they will likely keep the cash rate where it is for up to three years. (AP)

“In Australia, the economic recovery is underway and recent data has generally been better than expected. This is good news, but the recovery is still expected to be uneven and protracted and remains dependent on significant political support.” Lowe said. .

“In the central scenario of the RBA, it will not be until the end of 2021 that the level of GDP reaches the level reached at the end of 2019.

“In the baseline scenario, GDP is expected to grow around 5 percent next year and 4 percent during 2022.”

For someone with a $ 400,000 mortgage, the current interest rate of 0.1 percent represents a savings of about $ 1,000 per year, although that depends largely on the deal with the lender.

Low interest rates have already spurred a record level of home buyers to take the plunge, and NAB predicts a boom in first-time home buyers.

“In November, NAB home loan demand was stronger than we have seen for more than two years,” NAB homeownership executive Andy Kerr told 9news.com.au.

“Requests for the last six weeks increased more than 25 percent compared to the previous six weeks.

“Demand has been supported by historically low rates, greater confidence in the economic recovery and strong support measures from the government.”

The Governor of the Reserve Bank of Australia (RBA), Philip Lowe. (Sydney Morning Herald)

Kerr said NAB expects the high interest to continue given the likelihood of low rates for several years and as more stimulus measures come into effect from state governments.

“We are currently forecasting property price growth of more than 5 percent in each of the next two years, and apartment prices are likely to lag behind house price growth,” he said.

“While risks remain due to continued employment impacts from COVID-19 and a likely slowdown in population growth, today’s data shows that house prices have already stabilized and at NAB we are seeing a growing interest in regional areas in particular. “

Canberra is now the second most expensive real estate market in the country. (Image: Elesa Kurtz)

WHAT RECORD LOW INTEREST RATES MEAN FOR THE AVERAGE AUSSIE

The Australian interest rate, also known as the country’s “cash rate,” is the amount of money that each bank has to pay for the money it borrows.

Typically when the RBA lowers interest rates, Australia’s top lenders follow.

The lower the interest rate on a loan you have with a financial institution, the less money you will have to pay back.

Emma Di Francesco, 22, and Daniel George, 23 were the first home buyers in 2018. They are the demographic groups most likely to benefit from low interest rates. (Nine)

For many mortgage holders, the difference could be just a few dollars more in your pocket each month.

If your bank approves the full rate reduction, and that’s a “yes,” the average mortgage holder could have an additional $ 33 a month.

“Given that current home and business borrowers are unlikely to see much of the cut and the former will not spend it even if they do, the spur of a rate cut for the economy will be very modest,” said the executive of Canstar Group Financial Services, Steve Mickenbecker. .

“Borrowing rates are already so low that a haircut is largely irrelevant.

“Even if rolled over completely, a 0.15 percent cut to the $ 400,000 average over 30 years will lower the monthly payment by $ 33, not enough to make a big difference in borrowers’ spending and loan intentions. homebuying”.

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The information provided on this website is of a general nature only and does not constitute personal financial advice. The information has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information on this website, you should consider the suitability of the information taking into account your objectives, financial situation and needs.


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