This week our thoughts and prayers go out to all the flood-victims in NSW & QLD. With the impact of the 2011 floods still being felt, these current events must be devastating to those impacted. We are grateful that the wild summer storm in Adelaide did not have the same extent of damage.
The weather event that continues across the eastern parts of Australia has seen more than 1,600 mls fall over parts of South-East QLD and Northern NSW in a single six-day period (from 24 February to 1 March), sparking widespread flooding.
The damage bill is estimated to top $2 billion, driving financial support from all sectors.
Australia’s banks (NAB, ANZ, CBA & Westpac) have announced options to defer loan repayments (home, personal or business) for up to 3 months for customers impacted by the flood disasters in NSW and QLD, part of the support packages announced earlier this week.
“The message from banks is clear: don’t tough it out on your own, call your bank, they are ready to help.”
The Ukraine war is also having a potential impact on RBA rate deliberations.
This week, the RBA has decided to maintain the cash rate at its record low level of 0.1 per cent, in line with its previous expectations.
The RBA has aimed for annual inflation to be “sustainably” within the 2 to 3 per cent range, before it hikes up the cash rate.
For the central bank to be convinced that inflation is sustainably within the target range, annual wages growth will also need to rise above 3 per cent.
But annual underlying inflation has picked up more quickly than the RBA previously forecast, perhaps bringing forward their original rate increase time frames.
What does this mean for you?
Wage growth has fallen for the first time since 2014 and with the prospect of further declines through higher inflation, the last thing the economy needs is higher interest rates – and the RBA knows it.
Money markets had been forecasting the RBA would be lifting the current cash rate of 0.1 per cent around the middle of the year, but now the situation in Ukraine has changed everybody’s plans while the flood disaster in South-East QLD and Northern NSW will also have an impact on the central bank’s deliberations.
With the Property market yet to slow down variable home loan rates are a much more attractive option for the time being.
If you haven’t looked at your home loan interest rate for a while it is a good time to do so with the help of the TTO Finance team.
