LYNTON FINANCIAL SERVICES PTY LTD T/AS AUSSIE MORTGAGE MASTERS

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RBA CASH RATE UNCHANGED AT 1.50%

Tuesday, August 7th, 2018

The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% with it now being two years since the last cash rate move. I’d like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.

With a combination of factors including very low wages growth, high underemployment, flattening property prices and home lending and modest inflation, many experts are predicting it may be some time before we see the next rate movement and it may actually be downwards.

Another emerging factor is lenders making ‘out of cycle’ rate increases. The term ‘out of cycle’ refers to lenders increasing rates independently of the Reserve Bank. Gone are the days when lenders relied almost entirely on customer deposits and domestic short-term borrowing, pegged against official RBA rates to fund loans. Most lenders now have much more complicated funding structures including accessing offshore wholesale and securitisation markets. Regulatory changes designed to strengthen the banking system have also seen the amount of capital lenders are required to hold increase, which means they have had to look to more expensive sources than their own balance sheets to fund loans.

We have seen around 20 lenders increase rates out of cycle recently so it is important to review your lending options regularly to ensure they remain the most suitable for your situation. There may be different rates available from our wide panel of lenders and I’m always available to ensure you have the right financial solution for your current and future circumstances.

If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch.

Kind Regards,
Lynne and Aron
Aussie Mortgage Masters

PH: 1300 666 186

 

Author: Lynne Cox

She is a Mortgage Broker and holds an Australian Credit Licence # 365386. She has been involved in the Mortgage Broking Industry since May 1996 but has been involved in small business since 1977. Lynne is a licensed finance broker. She was the President of the Finance Brokers Association of Australia until March 2004 where she is now a Life Member, and she was also a Member of the Finance Brokers Supervisory Board until it disbanded in October 2003.