Interest rates end 2021 at 0.1%
There was no pre-Santa surprise as interest rates remain at the incredibly low 0.1% following today’s final RBA monthly board meeting of 2021.
So, for Australians paying off residential mortgages, the year comes to an end as it did last year with super-low rates.
How long will these rates for borrowing money last? There’s plenty of market speculation, as always. But as lockdown-weary Australians prepare for a well-deserved festive season, there is no clear sign that interest rates are set to rise.
And the person whose opinion matters the most, RBA Governor Phillip Lowe recently noted that the latest data and forecasts “do not warrant an increase in the cash rate in 2022.”
The RBA has kept rates at the historic low of 0.1% since November, 2020 and the Central Bank has projected it’s “still plausible” rates will stay this low until 2024.
Australia’s Central Bank reiterated its view today on rates, saying ‘The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range.
‘This will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently. This is likely to take some time and the Board is prepared to be patient.’
However, the Head of Australian Economics at the Commonwealth Bank recently opined that CBA expects the RBA to start increasing interest rates in November 2022. ANZ, meanwhile, has predicted the Central Bank will lift the rate in the first half of 2023.
Speculation aside, it’s still good news for those with a home loan. But for those trying to get on the property ladder, the big hurdle is still getting enough money together for a deposit. And with soaring house prices (up over 20% nationally in the last year) and stagnant wages growth, it’s getting tougher to find the money for a deposit.
Regulatory levers by the APRA (Australian Prudential Regulatory Authority) have been pulled to help squeeze credit and reduce risks to borrowers should rates rise.
Rising household debt is a concern for the federal government. And as ANZ tips house prices to rise a further 6% in 2022, expect regulatory measures to remain in place.
Prime Minister Scott Morrison is also keen that housing affordability doesn’t become an issue as the government moves to an election footing in the first half of 2022. The RBA addressed this today, saying: ‘Housing prices have risen strongly over the past year, although the rate of increase has eased over recent months.
‘Housing credit increased by 6.7 per cent over the past year, but, more recently, the value of housing loan commitments has declined from high levels.
‘With interest rates at historically low levels, it is important that lending standards are maintained and that borrowers have adequate buffers.’
From a lenders’ perspective, there are plenty of excellent home loan rates for those keen on exploring a fairer deal on their existing home loan rate. Mortgage Broker Group can help find you that deal, so contact our expert team for assistance. We understand the property market and can review your situation and find a rate that works for you. We also offer video conferencing.
Finally, as we reflect on another year, we wish our valued clients a joyous festive season, hopefully celebrating the end of 2021 with loved ones and friends.
Stay safe and here’s to a prosperous and happy 2022 from all at Mortgage Broker Group.