The housing industry and the Australian economy will be hearing the hellelujah chorus following last week’s Reserve Bank interest cuts, reports Maggie Rose.
The Reserve Bank announced last week that they will lower the cash rate to 2.25 per cent, taking the Australian dollar from 78.18 down to 76.51. Although the AUD has been slipping over the last few months, this is the lowest it has been since last August.
The Housing Industry Association’s Chief Economist, Harley Dale, explains that the lower dollar is good news for the economy. Our tourism, mining and education industries will definitely reap the benefits of the lower dollar,as will many Australians, including home buyers, and seniors living off their retirement plans.
“Those whom have fixed rate mortgages, and or those who plan on buying or renovating existing properties will benefit especially” he said.
Those with a mortgage will gain back $50 or more a month, depending on the type mortgage they have.
On a wider scope, things don’t look promising for the Australian dollar, as it’s now been brought down to a global scale. This is due to inflation, with the greater offset prompted by the ongoing drop in energy imports and the higher prices of oil and gas. Australian consumers have benefited the most from the dropping dollar, as we saw the price of petrol plummet earlier in the year.Experts are also expecting a rise in Australian exports, asbig businessesare set toexperiencesoaring cost prices. Even Australians living overseas will see the impact of the rate cuts and the low dollar, as living expenses for those in the U.S. and Asia are set for a mark-up.
Others who are going to take a hit are those who’ve been relying and investing in their own savings. Sadly, this means seniors who are self-funded.
As for the property market, Sydney is set to follow the same market high Melbourne saw last year. This suggests that in 2015 there will be prominent growth, averaging out at 2 per cent.
Finance experts are predicting that that there could be a further drop in the dollar by the end of the year. It’s important that those able to benefit from the rate cuts take advantage of their situation, and make the next few months count financially.