If you are a mortgage broker in Rockingham, Kwinana, Baldivis or anywhere in the Perth area, one of the most common questions you are going to be asked is “Which way is the interest rate going?” Many industry experts were of the opinion that the record low RBA interest rate could drop even lower, but RBA Governor Glenn Stevens recently made a statement that would indicate otherwise.

Remember that lowering the interest rates is always done with the sole intent of stimulating the economy. The strength of the Aussie dollar also influences the economy, but not in a way that many would think. It is natural to think that a “strong” dollar is a better dollar, but the reality is that when the Aussie dollar falls to a rate between 75-80 cents on the US dollar, the economy does better.

Mr Stevens said in December 2014 that 75 cents is the preferred level for the Aussie dollar. Mr Stevens also cited other indicators as being at a level preferred by the RBA. These indicators include: unemployment, inflation and the economy.

Craig James, chief economist of CommSec, feels that the combination of the falling dollar and falling oil prices is stimulating the economy to a point where the RBA won’t feel the necessity to cut interest rates further.

What it Means to You

If you are considering a home loan in the Rockingham, Kwinana or Baldivis area, there will never be a time better than now. When you look at the steady rise in prices over the last two years, every month a buyer delayed in buying a home cost them money. Prices are “only” projected to rise between 5-7% in what is being projected as a “flat” year, but a 7% rise over the year is a lot of money, especially when amortised and compounded over thirty years.

Talk to a professional mortgage broker at Smartline Rockingham. Let’s see what the numbers say: (08) 9527 1800.