The Reserve Bank of Australia (RBA) has announced its first cash rate decision of the new year.
As was largely expected, the central bank has held the rate at its current record low of 0.1%, where it has sat for the past three months since the November 2020 meeting.
According to CreditorWatch chief economist Harley Dale, given that the RBA “used up its ammunition” in terms of rate cuts last year, the focus in 2021 will be on using federal and state fiscal policy to complement the record-low borrowing rates and therefore sustain the momentum of the country’s economic recovery.
“In his National Press Club address yesterday, the Prime Minister reinforced and outlined a raft of policies, including tax cuts for Small and Medium-Sized Enterprises (SMEs). Such policies are in play against a backdrop of metrics – such as Australia’s unemployment rate – being in much better shape than many feared through much of last year,” Dale explained.
For his part, managing director of mortgage aggregator Finsure Group, John Kolenda, expects to see the cash rate stay at 0.1% for at least the next two quarters as the RBA monitors the economy, assessing how factors like the end of JobKeeper in March play out.
“The [RBA] will assess the impact to small business operators and property owners facing possible hardship when support finishes,” he said.
Kolenda added that it’s likely the next cash rate movement the country sees will actually be a rate hike – but that could still be a “long way off”.
“The RBA will be closely monitoring the economic data focused on unemployment, property prices and consumer spending. If these three areas all show a rebound, then we will certainly see rates rise,” the managing director said.
As for his industry-specific advice, Kolenda has warned mortgage holders against complacency.
While new customer rates are expected to stay competitive throughout 2021, the pace of interest rate cuts on home loans has slowed considerably across lenders of all sizes, indicating Australia could be near the bottom of the cycle.
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Source, Australian Broker Online
There's no doubt that stamp duty is a big financial barrier to homeownership. According to the NSW Treasury, it can take 2.5 years for an average worker to save up enough money to cover stamp duty, adding $34,000 to the cost of buying an average home.
NSW Treasury statistics also reveal that, since 1990, while average earnings in NSW have trebled and average house prices have increased five times, average stamp duty on dwellings has increased more than seven times.
After many years of debate and numerous reports calling for change, the NSW government, led by Treasurer Dominic Perrottet, has decided to act, proposing an annual property tax as an alternative to upfront stamp duty.
Property buyers will be given a choice: pay an annual property tax instead of stamp duty (and land tax where applicable), or pay one-off stamp duty. The annual property tax would be based on land value – a fixed amount plus a rate applied to the unimproved land value of an individual property, similar to council rates. Stamp duty concessions for first home buyers could be replaced with a grant of up to $25,000.
The government has released a consultation paper and is seeking public feedback by 15 March.
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