Cash rate is cut – time to seek a new home loan?

Knowing the conditions are just right to make a home loan application is crucial, which is why the latest cash rate decision might give you the incentive you’ve been looking for. The official cash rate had remained at its all-time low of 2.5 per cent since August 2013, but at its February 3 meeting, the Reserve Bank of Australia (RBA) opted to reduce it further.

This means that borrowers can now make the most of even lower interest rates, potentially encouraging you to take those all-important first steps onto the property ladder. The official rate is 2.25 per cent from February 4, so there’s no better time to see what products are currently available.

Although the decision didn’t come as a surprise to many, it nevertheless opens up the idea of property ownership to anyone who may previously have been renting. It’s well worth making use of a mortgage calculator to see how much – or little – it could cost to have a home of your own.

Buyers could find there are more new-build properties available as a result of the RBA’s announcement. The Housing Industry Association (HIA) anticipates that the construction sector will be boosted by a lower cash rate environment.

HIA Chief Economist Harley Dale said: “New residential construction has been the star performer of the Australian economy in recent years, generating considerable employment along the way, but wider domestic consumption and investment has failed to catch the ride.”

He stressed that Australia is in need of a broader based economy, which is something the building sector should be able to offer with the right policy settings in place.

There’s just no telling what the future of the cash rate will have in store, but it’s certainly well worth taking a look at your home loan options in the current environment.