According to the Mortgage Choice franchise, the Reserve Bank of Australia’s February 2007 decision to keep the cash rate steady will allow Australians who have - or are looking to take onboard - variable rate loans at least one more month to take a breath and reassess their financial situation. After last year’s three interest rate rises, it is a much-welcomed outcome.
This year’s first RBA cash rate decision results in Australia’s official interest rate remaining at 6.25 percent, its highest point reached since August 2000 but still a historically low rate. Eased inflation levels and consumer spending plus the firm Australian dollar are main reasons for the decision.
National Manager of Corporate Affairs for the financial services franchise, Warren O’Rourke said the time might be ripe for investors to step into the property market.
“The RBA’s latest rate decision has provided many Australians with an opportunity to continue having a good, long think about their current mortgage and/or budget and where it is heading,” he said.
“And, for many, one of those considerations is investment property vs. home. With housing affordability at a low for a significant number of first homebuyers, it is a good time for these Australians to think about initially becoming property investors instead – perhaps in an area that has cheaper housing.
“Many areas around Australia are showing signs of growth, some quite strong signs. There are good long-term opportunities to be had for those willing to research and perhaps move out of their comfort zone, outside the areas within which they were previously aiming to purchase.
“The financial benefits of buying an investment property can often outweigh those of buying a home. Maybe it is time potential homebuyers put aside their emotions and thought about what they can achieve by purchasing an investment property now to help them build a portfolio that will allow them to purchase a home further down the track”.
Of course, falling rental vacancy rates around the country should be taken into account – from the perspective of both a renter and property investor. For example, a tenant who owns an investment property may contemplate the option of raising the rent on their investment to cover a rental rise on their abode. Timing and length of lease term would certainly be considerations in this situation.
A number of economists are saying, based on current indicators, the next cash rate move will be quite a way off and therefore 2007 is looking to be a fairly stable year for interest rates.
12-Feb-2007