With the RBA set to meet for its monthly meeting, many industry experts are divided as to whether there will be another rate cut or not.
Australia's largest Reserve Bank Survey by finder.com.au, shows that out of the 37 leading experts, 57 per cent believe the rate will stay on hold, whereas 43 per are expecting another rate cut to a record low of 2 per cent.
According to Commonwealth Bank senior economist Michael Workman, the RBA tends to deliver cuts in pairs.
"Usually when they cut rates, they don't just do one out of the blue and stop. It's normally two," he said.
AMP chief economist believes we could see the cash rate drop to as low as 1.5 or 1.75 per cent over the next few months and could see home loan interest rates dropping to below 4 per cent. If home loan rates do fall to 4 per cent, monthly repayments would drop to $1432 for a $300,000 30 year home loan (based on figures from canstar.com.au).
The RBA has a number of reasons to implement another rate cut. Unemployment has hit a 12 year high of 6.4 per cent, business investment expectations have reached extremely low levels and the Australian dollar has steadily been increasing, reaching 79 US cents last week.
Although many see the benefits of another rate cut, it could have the opposite effect on first home buyers. Michelle Hutchison, Money Expert at finder.com.au, believes it is going to be one of the toughest years for first home buyers due to less government incentives and higher property prices.
“With the majority of the 37 experts in the finder.com.au Reserve Bank Survey expecting another cash rate cut by June this year and most of these experts are also predicting property prices to rise as a result, first home buyers face bigger hurdles to enter the market."
“In fact, finder.com.au estimates that we will see just over 92,000 first home buyers this year, which will be the third consecutive year that first home buyer numbers have declined. Last year there were 94,571 first home buyer home loans financed in Australia, down from 98,217 in 2013 and close to 100,000 in 2012.
Property prices are going to be one of the biggest hurdles for first home buyers this year. According to new data from CoreLogic RP Data, the average capital city home prices increased by 0.3 per cent in February, bringing the annual rise to 8.3 per cent.
If you are a first home buyer looking to purchase this year, you will need to get serious about saving for a sufficient deposit. For some simple tips, take a look at our blog 'Reach your deposit goal faster'. You can also speak to our friendly team on 137262 about what home loan options would best suit your needs for your first home.