Why Interest Rates are not going up anytime soon


Why interest rates are not going up anytime soon

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To the utter surprise of nobody, the Reserve Bank of Australia (RBA) yesterday kept the cash rate at the historical low level of just 1.5%.

Ongoing evidence, confirmed by CoreLogic findings that were released last Friday, points to the rate of capital growth in the Sydney and Melbourne housing markets as slowing.

Consistently high rates of capital gain, since early 2012, adding to high levels of household debt has in recent times had market analysts and commentators suggesting the next interest rate movement was up.

Banks, never ashamed to pick up an opportunity that presents - with both hands - have done much of the RBAs 'heavy lifting' by adjusted their own credit policies.

Earlier this year the RBA put out a statement that basically said "there's a strong case to lower interest rates but we have decided to leave them on hold, for fear of further fuelling the Sydney and Melbourne housing markets".

When inflation is so low that there are concerns of deflation, one would be excused for thinking the RBA had a duty to cut interest rates and encourage more spending... but they didn't. Add to this, with unemployment numbers up and the manufacturing, retail and the resources sectors all doing it tough, surely an interest rate cut was 'just what the doctor ordered'. But no, they didn't move them lower.

if you'd like us to look at switching any of your existing interest only loans to principal and interest, let us know. It may just work out costing you less AND allow you to begin paying down your loan.

Yes please, have someone call me to discuss reducing my loan repayments and possibly paying off the loan at the same time

Partnering with you for your investment success,

Nick Lockhart

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Founder, MRD Partners