fbpx
RBA lifts official cash rate to 0.35% – First rise since 2010

3 May, 2022

RBA lifts official cash rate to 0.35% – First rise since 2010

The Reserve Bank of Australia today has lifted the official cash rate by 0.25%, for the first time since 2010.

The new official cash rate

In making this historic decision, RBA Governor Dr Philip Lowe stated that he was aware of the central bank’s role in inflation control.

Australia’s inflation rate has jumped to 5.1% in the March quarter of 2022 – its worst result in more than two decades, fueled by rising fuel prices and higher home construction costs.

“The board judged that now was the right time to begin withdrawing some of the extraordinary monetary support that was put in place to help the Australian economy during the pandemic,” the RBA governor Philip Lowe said in a statement.

“The economy has proven to be resilient, and inflation has picked up more quickly, and to a higher level, than was expected. There is also evidence that wage growth is picking up.

“Given this, and the very low level of interest rates, it is appropriate to start the process of normalizing monetary conditions.”

Image Source: Steven Saphore/AAP

More rate hikes are on the way

In addition, Lowe noted publicly that other increases would follow the rise in May in the coming months.

“The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time,” he said. “This will require a further lift in interest rates over the period ahead.”

But the timing and size of future increases will depend on how the “balance of risks” evolves, Lowe said.

According to PropTrack economist Paul Ryan, today’s rise was a strong statement by the RBA that it is not influenced by politics.

“By moving today, rather than waiting for further data in June, the RBA is signaling that it will intervene to curb stronger than expected inflationary pressures, despite the ongoing federal election campaign,” Mr Ryan said.

“While the RBA seeks to remain independent from politics, failing to adjust policy may have been viewed as a greater political intervention.”

Source: MICK TSIKAS/AAPIMAGE

Inflation rate jumps to 5.1%

Inflation hit a 22-year high of 5.1% in the March quarter, while underlying inflation – which the Reserve Bank closely monitors – hit 3.7%, its highest level since 2009.

Michelle Marquadt, ABS Head of Prices Statistics, stated that the most recent quarterly increase is mainly due to construction supply and staff shortages, as well as the constant raging demand for new builds.

Source: Australian Bureau of Statistics’ Consumer Price Index data, released April 2022

According to the Consumer Price Index (CPI), The most significant contributors to the rise in the CPI were new residences, which increased 13.7%, and gasoline, which increased 35.1%.

“Fewer grant payments made this quarter from the federal government’s HomeBuilder program, and similar state-based housing construction programs also contributed to the rise,” Marquardt said.

“The CPI’s automotive fuel series reached a record level for the third consecutive quarter, with fuel price rises seen across all three months of the March quarter.”

International factors such as supply chain disruptions caused by China’s lockdown and Russia’s invasion of Ukraine have also raised concerns about a prolonged inflation surge.

According to market experts, RBA’s decision to raise the cash rate is an appropriate response to this shocking increase in inflation. 

“With the strength of the inflation figure, it wasn’t appropriate for the interest rate to stay the same,” said St George Bank economist Matthew Bunny

 “It was just so much stronger than the RBA had forecast, and it looks like running even higher, and they have to respond to economic conditions.

What does the cash rate hike mean for you as a buyer?

Borrowing becomes more expensive

The cash rate is one of the main factors that banks consider when setting variable home loan interest rates, so any changes will usually be passed on to mortgage holders.

Put it simply, raising interest rates makes borrowing money more expensive. And for people with a mortgage, their repayment will be higher. 

As a result, people with a mortgage will almost certainly take a hit, particularly when it starts a sustained period of higher mortgage interest rates. With the cash rate rising by 0.25 percentage points, someone with a $500,000 mortgage will see their repayments rise by $104 each month (If passed on by the banks).

However, this is a necessary move to manage the rate of inflation. 

When borrowing becomes more expensive, demand for goods and services may fall, lowering the overall costs.

Those with deposits will be celebrating 

Although the rate rise will hurt borrowers, it will be good news for those with deposits in their savings accounts. 

The rise should be passed on to both lending and deposit rates by banks.

According to UNSW Business School Professor Peter Swan, the rate rise will lead to more return on savings and on superannuation; both will enjoy growth in interest rate. 

Opportunities for first home buyers 

Although the hike on Tuesday could hurt lending and the borrowing capacity of property investors, it could be a good sign for some first home buyers.

There will be fewer competitors in the market, causing house prices to stabilize further or even fall. The property market is gradually shifting from a seller’s market to a buyer’s market.

According to Andrew Wilson, chief economist at My Housing Market, property prices in the two major capital cities will fall a “couple of per cent” this year, after already easing from their boom peak of the previous two years.

“Melbourne and Sydney have consolidated those higher prices, and there is no more capacity to grow at the spectacular rates of last year,” he says.

Rising interest rates will have a sobering effect on buyer sentiment, but demand for housing continues to outstrip supply, he says.

What is in store for first home buyers?

Despite rising cash rates, an affordable home without any compromise is still within reach. There are a handful of suburbs across Sydney which are able to offer the best that Sydney has to offer.  

We have put together our top affordable suburbs or projects, where you can buy for under $500K and can secure with today’s interest rates before further rise.

Contact us below to download your FREE ebook on where to find and how to buy Properties under $500K in Sydney. 

AUSTRALIA PRIVACY STATEMENT

Last updated: August 2020

INTRODUCTION

St Trinity Property Group and its affiliated entities, representatives, agents and related companies (collectively referred to as ST TRINITY PROPERTY GROUP) respect the privacy and security of your Personal Information, as defined below, and comply with the requirements of the Australian Privacy Principles under the Privacy Act 1988 (Cth).

This Privacy Policy explains in general terms how St Trinity Property Group handles your Personal Information. However, it does not apply to St Trinity Property Group’s employee records to the extent they are handled by any of our companies that is or was the employer of that employee in relation to the employee’s current or former employment. Such employee records are generally exempt from the Act and will be dealt with as permitted by law.

You may be able to deal with us without identifying yourself (i.e. anonymously or by using a pseudonym) in certain circumstances. If you wish to do so, please contact us to find out if this is practicable in your circumstances. However, if you do not provide us with the Personal Information we have requested, we may not be able to complete or fulfil the purpose for which we collect the information, including providing our services. By visiting our websites, using any of our services or otherwise providing us with your Personal Information (or authorising it to be provided to us by someone else), you agree to your Personal Information being collected and handled as set out in this Privacy Policy.

WHAT PERSONAL INFORMATION DO WE COLLECT AND HOLD?

Under the Act Personal Information is defined as information or an opinion about an identified individual, or an individual that is reasonably identifiable, in whatever form and regardless of whether it is true or not (Personal Information). The Act also defines a subset of Personal Information as sensitive information (for example health records, racial or ethnic origin, religious beliefs, criminal records).

The types of Personal Information we collect and hold will depend on the circumstances of collection and on the type of service we are providing. For example, when we are engaged to sell a property, we may collect and hold Personal Information from both the seller and potential buyers such as name, address, email address, telephone numbers, employment details and details about their business.

We may also collect and hold certain sensitive information that is reasonably necessary for the provision of our services, including health and criminal records. If you provide us with any sensitive information, you consent to us collecting that information and handling it in accordance with this Privacy Policy.

HOW WE COLLECT PERSONAL INFORMATION

We may collect Personal Information about you directly when you deal with us over the telephone, send us correspondence (whether by letter, fax or email), have contact with us in person, visit our websites or complete hard copy or online forms.

There are also circumstances where we may collect Personal Information about you from someone else. For example, from:
• Market research companies contracted by us to obtain information so that we may improve and market our services;
• Your employer;
• Other agents and valuers who may be involved in the services we provide;
• Property developers who contract us to market properties;
• Publicly available information and databases;
• Any of the companies within the St Trinity Property Group (both local and overseas);
• and Anyone you have authorised to deal with us on your behalf.

We also automatically collect certain information when you visit our websites or our subscribers receive promotional emails from us via cookies and other tracking technology (such as web beacons), some of which may be capable of personally identifying you. Such information includes the type of browser and operating system you are using, your IP address and how you use our websites.
Depending on the type of service you or our customers have requested, we may also seek to collect information about someone else from you (for example, contact details of your solicitor, emergency contact person or tenant). However, you must not provide us with Personal Information about another person unless you have clear consent from that person to do so, told them that their Personal Information will be handled in accordance with this Privacy Policy and directed them to where they can find it.
Regardless of how it is collected, we handle Personal Information in accordance with this Privacy Policy.

WHY WE COLLECT, HOLD AND USE PERSONAL INFORMATION

We generally collect, hold and use your Personal Information for the purposes for which it is provided to us (which will usually be obvious at the time of collection), related purposes or as permitted or required by law. Such purposes may include:
• Acting as agent for vendors or purchasers in relation to the sale of a property;
• Acting as agent for owners or tenants in relation to the leasing and or valuation of a property;
• Project management services;
• Structured advisory services;
• Town planning services;
• Capital allowances services and other consulting services in relation to the property market;
• Administration of our business, such as collection of overdue commissions or outstanding fees;
• Responding to client enquiries and communicating with you from time to time to maintain contact and keep you updated on the services you have requested;
• Forecasting future needs of our services and general quality assurance and training purposes;
• Engaging in legal proceedings and/or enforcing judgments and/or orders;
• Complying with the applicable legal or regulatory requirements and/or orders of competent authorities;
• Providing you with promotional and marketing information, including market research reports, newsletters, event invitations and/or property market information relating to our products and services which we think may be of interest to you; and Any other purpose identified at the time of collecting your Personal Information.

We generally use information automatically collected by cookies and other tracking technology to identify you as a valid user, ensure that no one else can sign on simultaneously with your account from another computer and help us serve you better based on your registration preferences. We may also use cookies to help us facilitate any promotions or surveys that we provide. Third parties whose products or services are accessible on our websites may also use cookies, and we advise you to check their privacy policies for information about their cookies and other privacy practices.

DISCLOSURE OF PERSONAL INFORMATION

We may disclose your Personal Information to third parties as may be necessary for any of the purposes stated in the above section. Such third parties generally include:
Our third party providers, contractors, consultants, agents and/or representatives (such as law firms, banks, financial institutions, insurers, IT providers, mortgage referral services providers and/or wealth management services providers) who provide services to us or on our behalf, including to:
• Conduct valuations;
• Assist with obtaining payment from creditors;
• Operate data centres;
• Conduct market research;
• Provide advice;
• Potential buyers, tenants, conjunctional real estate agents and brokers for the purpose for which the information was collected or for related purposes (for example to complete a transaction on your behalf or provide you with a service that you requested); Anyone you have authorised to deal with us on your behalf;
• Any of the companies within the St Trinity Property Group and their related companies; Government authorities, regulatory bodies, law enforcement agencies, courts, tribunals and/or parties to the legal proceedings where you have consented to this or we are required or authorised to do so by law;
• Debt collection agencies; and/or Any other third parties identified at the time of collection of your Personal Information.

DISCLOSURE OF PERSONAL INFORMATION OVERSEAS

Some of the third parties listed above to whom we may disclose your Personal Information are located overseas. For example:
Our information technology and business process service providers that are located in countries including (but not limited to) the Indonesia, India and Philippines; and Our overseas clients that are located in the same countries as the companies within the St Trinity Property Group.
Our contracts with these parties generally include an obligation for them to comply with Australian privacy law and this Privacy Policy.
However you acknowledge that, by agreeing to the disclosure of your Personal Information to these entities outside of Australia, we will no longer be required to take reasonable steps to ensure the overseas recipient’s compliance with the Australian privacy law in relation to your Personal Information and we will not be liable to you for any breach of the Australian privacy law by these overseas recipients. On this basis, you consent to such disclosure.

ACCESS, UPDATE AND CORRECTION OF PERSONAL INFORMATION

We take reasonable steps to ensure that the Personal Information we hold about you is accurate, complete and up-to-date. However, we also rely on you to advise us of any changes to your Personal Information. If you are able to access your Personal Information by logging on to an account you have with us, it is your responsibility to ensure your information is accurate, complete, relevant and up-to-date.
On request we will provide you with access to the Personal Information we hold about you, including for the purpose of correcting or updating that information, unless otherwise required or permitted by law.
There is no charge for making the request or giving the access to your Personal Information. We will deal with your request within a reasonable period after the request is made.
If we refuse to provide you with access we will provide you with a written notice that, at a minimum, outlines reasons for the refusal and the complaints mechanisms available to you.
If you wish to access the Personal Information we hold about you or to update or correct it, you can either do so by logging on to your account (if you have one) or contact us using the contact details provided below. We will require you to verify your identity and specify what information you require.

SECURITY OF PERSONAL INFORMATION

We take reasonable steps to protect any Personal Information that we hold from misuse, interference and loss and from unauthorised access, alteration and disclosure. For example, we implement IT security procedures including password protection, firewalls and site monitoring and we store your Personal Information on a secure server.we store your Personal Information on a secure server.
However, data protection measures are never completely secure and, despite the measures we have put in place, we cannot guarantee the security of your Personal Information. You must take care to protect your Personal Information (for example, by protecting any usernames and passwords). You should notify us as soon as possible if you become aware of any security breaches.

DIRECT MARKETING

When you register as a member on our websites, you will be given a choice as to whether you want to receive e-mail messages from us, including newsletters, announcements and e-mail communications about our latest news, products or services. To the extent the relevant local law requires us to seek your consent, we will only send such messages to you if you opt-in. If you do not wish to receive direct marketing calls or materials, you may use the unsubscribe facility in the marketing communication or contact our Chief Privacy Officer using the channels prescribed below. Further, as a registered member with us, you can modify your choice at any time by accessing your registered account with us. We will stop using your Personal Information for direct marketing if you so request.

PRIVACY ON OUR WEBSITES

Our websites may contain links to the websites of other entities. If you click on such links, you will be transferred to the websites of these entities. We have no control over, and are not responsible for, the privacy practices of these entities. You should read the privacy policy of these entities to find out how they handle your Personal Information when you visit their websites.

WHAT IF YOU HAVE A COMPLAINT?

If you wish to make a complaint about a breach of this Privacy Policy or the Australian Privacy Principles of the Act you can contact us using the contact details below. You will need to provide us with sufficient details regarding your complaint together with any supporting evidence. Our Chief Privacy Officer will investigate the issue and determine the steps that we will undertake to resolve your complaint. We will contact you if we require any additional information from you and will notify you in writing of the outcome of the investigation. If you are not satisfied with our determination, you can contact us to discuss your concerns or contact the Australian Privacy Commissioner via www.oaic.gov.au.

PRIVACY & SITE CHANGES

St Trinity Property Group may update this Privacy Policy from time to time so please review it periodically for changes. If the changes are significant or substantive, they will either be advised to you in writing or posted on our websites at www.sttrinity.com.au. Your continued use of our websites or services, requesting our assistance or the provision of further Personal Information to us (directly or via an authorised person) after this Privacy Policy has been revised, indicates your acceptance of the revised Privacy Policy.

OUR CONTACT DETAILS

If you have a query relating to this Privacy Policy or wish to make a complaint, please contact us using the following contact details:
• St Trinity Property Group
• Chief Privacy Officer

• PO Box 1235
• Menai NSW 2234
[email protected]

MORE INFORMATION

For more information about the Privacy Act in Australia and protecting your privacy, visit the (external link) website below:
oaic.gov.au