The Reserve Bank has slashed rates just in time for Christmas, spelling great opportunities for property investors.
At its monthly Board meeting today, and the last meeting until February, the RBA decided it was to cut the cash rate to 3 per cent, a drop of 25 basis points.
Governor Glenn Stevens noted in today's announcement that, "While the full effects of earlier measures are yet to be observed, the Board judged at today's meeting that a further easing in the stance of monetary policy was appropriate now. This will help to foster sustainable growth in demand and inflation outcomes consistent with the target over time."
Multifocus Properties and Finance's CEO, Philippe Brach, told Smart Property Investment that following this decision, "we are now comforted in the view that it is a good time to seriously look at taking advantage of the current lending environment.
"By this I mean that banks are currently very aggressive in their discounting and there is almost certainly opportunities to lower an existing mortgage holder's variable rate and also consider some rate fixing.
"The current low rate environment also makes property investment very attractive. With the correct strategy and a robust risk management plan there are many opportunities for savvy investors."
RP Data’s Cameron Kusher said that “From a housing market perspective, I would have to assume the RBA is reasonably comfortable with the current performance of the market, which suggests it has been the collection of other weaker economic indicators that have compelled the RBA to cut interest rates.
“Dwelling values are 2.1 per cent higher than what they were at the end of May this year and there has been a modest uptick in transaction volumes, which suggests that consumers are slowly responding to the previous rate cuts,” said Mr Kusher.
This comes at a time when the 25 basis point cut in October is “still working its way through the data”, however the RBA clearly feels that the overall economy required further stimulus, he said.
“Overall the housing and construction sectors are showing minor signs of improvement so it is other factors which have convinced them to cut rates today.
“Dwelling approvals have seen a marked improvement over the past two months and housing finance commitments are rising from a low base. Our vendor metrics are also indicating that housing market conditions are improving, with the average selling time and rate of vendor discounting measures both showing improvements from last year.”