The RBA has decided to leave Australia’s interest rate on hold again for the umpteenth time at 1.5%.
The Reserve Bank of Australia (RBA) has kept the interest rate at the same level since August 2016, meaning the RBA hasn’t done a thing since the UK voted for Brexit.
Why should you love the RBA?
1: Good for Your Mortgage
The RBA’s decision to reduce the interest rate to 1.5% and leave it there has meant many Australian homeowners haven’t been overwhelmed by mortgage repayments. That’s despite banks such as Commonwealth Bank of Australia (ASX: CBA) and Australia and New Zealand Banking Group (ASX: ANZ) raising their rates recently.
2: Helpful for the Economy
Homeowners have had more money in their pocket to go out and spend on TVs and phones from retailers such as JB Hi-Fi Limited (ASX: JBH). More spending means more jobs and more growth.
3: Supports House Prices
Lower interest rates tend to send asset prices up. House prices have clearly gone up a long way since 2012 and this seems to have made every home-owning Aussie wealthier. Australians are some of the wealthiest people in the world, according to Business Insider. In 2015, only the Swiss were richer!
Tough Love: Savers are Being Crushed
Pensioners living on term deposits and prospective first home owners are getting much lower interest rates for their cash held in savings accounts and term deposits.
Low interest rates encourage borrowing instead of saving. However, this might be leading to record mortgage stress across the country anyhow. That is, despite the record-low interest rate.
When will the RBA move?
Many economists now believe the RBA will start raising rates at the end of 2019, in around a year.
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*As voted by us