On November 5, 2015

What does November's cash rate mean for you?

It's that time of the month again. The Reserve Bank of Australia's (RBA) board has gathered to make what is arguably one of the most important decisions to the Australian economy and in turn, the investment property market.

To no one's surprise, the cash rate has been left at the record low of 2 per cent. This represents the sixth consecutive month where this figure has gone unchanged, and will go on to affect all monetary movement across the country.

The statement from RBA Governor Glenn Stevens highlights factors that have influenced this decision.

The need for stimulation in the economy has been cited once again as a key factor. While expansion in the economy continues, "GDP growth has been somewhat below longer-term averages for some time". Low interest rates should encourage further investment in businesses as well as boost consumption; all of which will help stir momentum in the economy. Inflation has also remained modest and on target, allowing space for the low cash rate to work without the threat of excessive growth.

Businesses have benefited from low interest rates as consumption rises.Businesses have benefited from low interest rates as consumption rises.

What does this mean for the investment property market?

Property investment mortgages have remained affordable with interest rates still being reasonably low.

The RBA's statement outlines that lending conditions have changed somewhat since the previous cash rate announcement in October. Several major banks have bumped up their interest rates due to the tightening restrictions on lending. This has been enforced to cool prices down in hot property markets like Sydney and Melbourne, while keeping the economy active and growing.

It's no doubt a tough balancing act, but the intended effects are taking place. A report by CoreLogic RP Data shows that dwelling prices in Sydney and Melbourne rose by 1.5 and 3.1 per cent over the September quarter; a marginal growth by these cities' standards.

In spite of this, property investment mortgages have remained affordable with interest rates still being reasonably low. It could represent a window of opportunity for you to lock in a fixed home loan before these rates rise again.

There are better ways still to secure a great deal on your investment financing. Using the services of a mortgage broking professional will allow you to tap into a larger range of mortgage solutions to find something that best fits your objectives. Furthermore, these industry experts can help negotiate a better rate on your behalf.

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