At their most recent meeting (01 December 2015), the Reserve Bank of Australia (RBA) board decided to keep interest rates at the record low rate of 2% for the 8th consecutive month. However, with the major banks lifting their mortgage rates in November, does it really matter what the RBA decides to do?
Online real estate site Domain had a look at why the banks decided to make the move in spite of what the RBA did with the official rate. Essentially, new requirements directed by the Australian Prudential Regulation Authority (APRA) have meant it now costs banks more money to do business. The only way banks could increase their capital is to raise interest rates for borrowers or decrease the amount of dividends paid to shareholders. As the latter would lead to a decrease in the share price, the major banks opted for the former.
Will the banks do it again?
Some economists seem to think so, leading to further speculation that the RBA will maintain official interest rates at 2% or even lower into 2016.
What does this mean for you?
Well, now might be a good time to review the current interest rate on both your business and personal loans to see if there may be a better deal available. Contact Taylor Finance to arrange a no obligation review.