This month the Reserve Bank of Australia (RBA) announced the cash rate would stay on hold at 1.0%, following two consecutive cuts in the preceding months that totalled fifty basis points.

The decision was widely expected, especially considering that cutting the official cash rate three months in a row has only happened twice before: once in early 2001 and again during the Global Financial Crisis in late 2008.

For us, and perhaps for you, the anticipation around rate movements can often be little more than a momentarily distraction. While speculators and punters alike tend to get swept up in the excitement of a potential rate cut and the possibility of that translating to increased savings, it’s important to consider the whole picture.

The fact of the matter is, low rates are a key indicator that the wheels are not turning perhaps as efficiently as they could in the context of the wider economy, and definitely within the housing market.

The RBA states that current conditions in most housing markets remain soft, although there are some signs of a turnaround, especially in Sydney and Melbourne. Growth in housing credit remains low. Demand for credit by investors continues to be subdued and credit conditions, especially for small and medium-sized businesses, remain tight. Mortgage rates are at record lows and there is strong competition for borrowers of high credit quality.

That last sentence is of particular interest to us and it should be to you too. If it’s not your first rodeo so to speak, you’ve been gainfully employed for a decent period of time and you’ve (mostly) got all your other financial ducks in a row, then the current climate could be an excellent time for you to consolidate your wealth and maximise your savings.

Its a statement that reflects the kind of clients we’ve been speaking to a lot of lately. Clients of high net worth that are financially savvy with a clear vision of what hey are trying to achieve.

In saying that, if thats not you, this is also a great time to start to clarify your own financial goals and aspirations and put a strategy in place to move towards them.

It’s more than getting excited about a monthly rate cut or hold. It’s more than getting a letter from your bank saying they have agreed to pass on a modicum of those savings to you (or not). It’s about looking at where you are and how we can improve on that in the short term – yes – but also understanding that this is about the long game. It’s about balance and rational decision making that is ALWAYS in line with all of that.

While the August decision to hold was expected, speculators are indicating that there is a “strong likelihood” of at least one more cut to come later this year. However, further reductions will likely not have a significant impact on the accessibility of home lending or the improvement of property values, bringing us back to our sentiment above.

If you’d like to get a customised solution for your property portfolio, we urge you to get in touch with Dan to discuss a plan.

All lending subject to status and lenders criteria. Terms & conditions apply. This document contains general information only. Your own personal circumstances have not been considered and you should seek independent financial advice prior to making any decision on a financial product.

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