What does inflation have to do with you if you are looking for a mortgage broker in Baldivis? More than you think. Here’s why.
Inflation is the rise in costs of basic consumer products such as petrol, food, alcohol, education, clothes and even postage stamps. These help make up the Australian Consumer Price Index (CPI), which is a measurement of the movement of prices for all consumer goods.
You may not know this but the CPI is currently the largest driver of whether Reserve Bank of Australia (RBA) cash interest rates rise or fall. Currently, the CPI inflation rate is at 1.7%. If it reaches 3%, we will likely see a rate hike. If it stays below 2%, we will likely see another rate cut.
Why does it work like this? Because the RBA wants to keep inflation between 2% and 3% to “encourage strong and sustainable growth in the economy.” Their rationale is that charging consumers more money in interest rates gives consumers less money to spend, keeping businesses from raising prices and lowering inflation. Conversely, when interest rates are lower, consumers have more money to spend, encouraging a rise in prices and raising inflation.
Since last year, the inflation rate has stayed below 2%. The RBA response has been to keep the interest rates at a record low.
The X-Factor: Why You Need a Mortgage Broker if You’re House Shopping in Baldivis
Recently, an “X-factor” appeared that has circumvented some of the RBA efforts to cut costs: the banks raising interest rates on their own. Due to “increased regulations,” banks have increased interest rates, first to investors and now to owner-occupiers.
That means it is now more important than ever to have a great mortgage broker who can find you the right loan with the right terms and the right rate for your individual financial situation.
At Smartline Rockingham, we have 28 different lenders to choose from and we know which ones are the most advantageous for your individual financial situation. To learn more, call us today: (08) 9527 1800.