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Interest rates to hold in April, despite pressure to cut

Interest rates to hold in April, despite pressure to cut

The Reserve Bank is likely to leave rates on hold again tomorrow for the 11th consecutive month, despite growing pressure for a rate cut.

A RateCity.com.au analysis of 26 key economic indicators shows that a higher Australian dollar, a dip in consumer confidence and a property market coming off the boil won’t be enough to prompt a rate cut this month.

Sally Tindall, money editor at RateCity.com.au, said that while Glenn Stevens was unlikely to fold to these pressures, Australia could see a cut to the cash rate within the next few months.

“While the RBA has maintained a clear easing bias for almost six months, it’s shown little inclination to actually go through with a rate cut,” she said.

“But if the Aussie dollar continues to climb the RBA could be forced to act on rates, potentially before the next Federal Election, which would be a windfall for the government.”

RateCity.com.au’s monthly cash rate analysis found a number of key economic indicators would add to the mounting list of reasons for a future cut.

“The Australian banks have caused the ASX plenty of pain over the last few weeks with the major bank’s share prices taking a significant hit on fears of rising bad debts,” she said.

“House prices are also off the boil, with small falls recorded in some cities, but the RBA is likely to want to see the longer-term trends settle before they cut rates again.

“Overseas, New Zealand’s decision to cut its cash rate to a record low of 2.25 per cent did prompt speculation the RBA would follow suit, but the outcome of the RBNZ’s move has been disappointing, putting those rumours promptly to bed,” Tindall said.

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Learn more about home loans

When does Commonwealth Bank charge an early exit fee?

When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

Cash or mortgage – which is more suitable to buy an investment property?

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.

A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.

When do mortgage payments start after settlement?

Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.