Keeping finances in shape as the cash rate decision comes around

February is nearly upon us, which means that the Reserve Bank of Australia (RBA) is on the verge of making a new official cash rate announcement again. The organisation hasn't made one of these since the start of December, due to the holidays, so this is the first big statement on interest rates for the year.

The cash rate is a big influencer on interest rates, so if your wealth coaching has led you down an interest-based path you'll be wanting to pay attention! The cash rate hasn't changed since August 2013, but this year could be the time that it finally moves again – but which way might it go?

How low can it go?

The latest Consumer Price Index result for Australia ended up out of the RBA's target inflation zone, according to industry voices. What this means is that there isn't too much pressure on people's bottom line from inflation, and so there are many calls for the cash rate and interest rates to stay down. 

Representatives from the Housing Industry Association (HIA) and Real Estate Institute of Australia both said that low inflation means interest rates could be cut. In fact, the HIA said that low interest rates weren't just a good idea, but something that has to happen.

With strong calls for low interest rates, 2015 could see a cash rate cut from the RBA.  Depending on your strategy, this could make wealth creation much easier, as it makes taking out finance for property investing even more affordable. Low interest rates would mean you can secure lower mortgage payments, freeing up more of your money for other things.  

Take advantage of a low cash rate

Even if the cash rate doesn't go down in February, it is still likely to remain steady. This affords property investors even more stability to secure a low interest rate home loan, and to take the time to find the right areas in which to buy new properties for investment. 

One crucial part of a property investment strategy is getting tailored advice for your specific situation. Too often, people tend to try a one-size-fits-all approach to wealth coaching, which doesn't work. 

By working with one of our wealth coaches, you effectively get a personal trainer for your funds, who can help you shape a wealth creation strategy, taking into account the cash rate and the impacts it has on the economy.