The Top Stories This Week From A Young Australian’s Perspective.
1. The Reserve Bank of Australia raised the cash rate to 1.35%.
What does this mean for young Australians?
Just four weeks after announcing a cash rate increase of 50 basis points (0.5%), the RBA has announced another cash rate increase by the same amount. The cash rate now sits at 1.35%
Similar to the cash rate increase from a month ago, a higher cash means a higher interest rate. And a higher interest rate is good for savers, but bad for borrowers.
Not sure how increasing interest affects borrowers and savers? Click here to read our explanation from the previous cash rate hike.
So if you have a mortgage or personal loan, this means that you’ll be paying more interest to your banks. Which means less discretionary spending for you. But if you have a high-interest savings account, then the bank will pay you more for having your money in the savings account.
Read how interest rates and inflation go hand in hand here.
2. House prices continues to fall
What does this mean for young Australians?
House prices have been falling since April and it doesn’t look like it’s stopping soon. Last month, Sydney recorded a 1.6% drop in home prices, the largest since 1989.
For young Australians, this is probably music to your ears! With house prices finally coming down, the dream of owning your home might actually be possible in the years to come.
But with potentially more cash rate increases still to come, house prices might fall even further. Many economists expect that by the time the housing market reaches its lowest point, house prices will have fallen by more than 15%.
