Interest rates to stay low at Adelaide RBA meetup
20/02/2012 
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RBA will not move on interest rates at this time, and possibly not till February 2011.
More good news for mortgage payment strapped home owners! As we predicted in May 2010, the Reserve Bank of Australia will likely leave official interest rates on hold till later.
The board of the Reserve Bank of Australia will be meeting today in Adelaide [in the still striking building across Victoria Square from where my business used to be] to consider its decision, but when 25 economists were surveyed by Bloomberg they all agreed with Mr Mortgage.
Australian Economy is strong and getting stronger
All the news on the economic front for Australia is good to great. Magic overseas trading figures, strong employment growth, good to great profit reports from major banks and companies, and a homebuilding bounce back, consumer spending on the up [for the moment].
Isn’t this all pointing to higher interest rates?
Everything you say that should lead to an increase of interest rates?
Not when the recipe includes low inflation, which is the bottom line goal of the RBA. So as long as we can keep prices low then the low mortgage rates for homeowners and home buyers, as well as for business is set to continue.
If elections are bad for business, a hung Parliament is a disaster.
Australia’s hung Parliament [which I predict will fall to a Labor Government], would have also had something to do with the RBA’s decision.
In the old days big business used to stop everything so the Liberals would have a easy run in the election. We have seen a bit of that with the miners of late cancelling, suspending or delaying mining ventures. So fear is a good way to get someone thinking your way, and Tony Abbot has been pushing the fear button at every opportunity.
On top of that,[for some unknown emotional reason people stop functioning as normal in an election, maybe even stop eating, when a hung parliament occurs. I would expect to see bad figures in consumer spending in the next report because of this.
Small business with shallow pockets must be hurting by now, and are screaming make up your bloody minds guys to the independents. You can't rush country folk. But you can expect a better considered outcome.
Australia's looming dark cloud is China's Property Bubble
The major downer could be China's attempt to cool its growth, and the US drive to have China's currency revalued higher to a less competitive level against the US dollar, allowing for a fairer trading playing field between them.
China has also moved to tighten lending in China in an attempt to stop its property bubble from bursting. Lets hope that works, otherwise homeowners in Australia may feel the burst affecting our real estate prices. This has to be playing in the back of the RBA board members minds.
Let's hope that China's woes does not slow those iron and coal laden ships from leaving our shores.
The Total Interest rate picture looks bright
When you put those concerns, and the mining boom and record reduction in trade deficits, strong business investment and continued consumer spending, then higher inflation figures will trigger an interest rate rise move but the RBA down the track.
What gives the RBA sweaty palms is that they can't yet tell which way the cat will jump in America and Europe. Are they headed for a higher unemployment and more economic woes? The treat of a double dip recession is real, not that many people and regions in the US have had any relief from the first wave that hit the US in 2008.
How to get a Lower Mortgage Interest Rate.
So even if your bank opts to raise your home loan interest rates above its normal cash rate margin, you can simply go and switch your loan to a non bank mortgage lender who have some really low mortgage rates on offer right now.
Or instead of waiting for the rush when the axe falls, why not get a better mortgage at a lower interest rate organised today?
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Rick Adlam has been helping clients with home loan finance since 1985 when he was home consultant with AV Jennings. Rick started Equity Home Loans in 1996 to help homeowners become property investors. Rick currently consults in the development of Mr Mortgage for mortgage brokers and HomeMate for new home buyers.
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