Andrew Mirams with the very latest on Interest Rates for June 2014. Again, rates remain on hold and with the latest Budget released there has been some eyebrows raised and the negative commentary has followed close behind. But has this effected the overall activity by the consumer? ”

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Podcast Transcript:

“Andrew Mirams: Hello and welcome to our June interest rate update. Once again, the Reserve Bank has opted to leave rates on hold. Good news for all the home borrowers and investors out there that our rates continue to stay at a low level.

Probably, more interesting is the commentary and there’s been a fair negative sentiment to the budget that’s been handed down. Interestingly enough though, the negative consumer sentiment hasn’t dropped as much as it did last year. We seem to be still in a reasonable place this year so maybe if history points us to anything it’s that things aren’t that bad but the consumer sentiment and the RP data index for properties have come out.

The consumer index dropped quite markedly over the month and property prices across the board, across all the capitals, decreased by 1.9% over the month of May. Probably as a result of the budget. It’s not abnormal. It tends to happen most years. What does that mean for interest rates?

Well, I think what it means is there’s still a few saying we’ll get a rate increase this year but most are really pointing towards maybe first quarter or second quarter of 2015, which is good news for low rates and those of us looking to borrow more money. There’s still a few, as I’ve said, saying they increase this year. I think some of that is our economists actually not wanting to admit they’re wrong, to be brutally honest. I can’t see why interest rates would go up.

We’ve still got some concern over rising unemployment. Although be it, we’re only around the 6% mark. Some states getting into the 7% and 7.5% percent. Whilst there’s people being unemployed, it’s probably unrealistic to be increasing interest rates. With the fuel excise, taxes and things like that going up is probably going to be enough to just keep that inflation band in the 2% to 3% range that the Reserve Bank wants. If that is the case then, it would really appear for the next, certainly I think the next, 9 months but maybe we might get out to 12 months that rates will be as they are today.

Again, the reminder is always don’t be complacent with your interest rates. The banks are there and they’re in a competitive market. They’re in a marketing frenzy to try and get your business so you all be looking to have a 4 in front of our interest rate or very low 5′s. If you’re paying any more than that you should be giving us a call to do a full and comprehensive review on your portfolio. We’d love to speak to you and contact us, of course, on (03)9598 8544 or you can go to our website at www.intuitivefinance.com.au. Until next month, have a great month.”