Affordable mortgages available thanks to low cash rate

The board of the Reserve Bank of Australia (RBA) has elected to keep the official cash rate (OCR) at a low 2.5 per cent following its meeting on May 6. 

In a statement released the same day, RBA Governor Glenn Stevens noted the OCR would remain unchanged. It has been resting at 2.5 per cent since August last year. Before this, the rate was 2.75 per cent, a figure which it rested at for three consecutive months. 

Good news for home buying

The announcement will bode well with those wishing to purchase a home, whether they're wanting to upgrade from their existing property or buy something that's smaller but easier to maintain. 

The official cash rate influences lenders' mortgage rates and Australians have been making the most of the affordable home loan products on offer in recent months.

A fixed-rate loan guarantees the low rates, while a variable loan will fluctuate along with the OCR. This can be favourable if the OCR drops, but not wholly positive if it rises.

However, Mr Stevens has made comments that indicate those on variable rates are in a comfortable spot for the time being.

"On present indications, the most prudent course is likely to be a period of stability in interest rates," he noted in a May 6 statement. 

It's not clear exactly how long the official cash rate will remain at 2.5 per cent, but it looks like stability will be the trend for a few months at least.

Mr Stevens brought up the significant increase in dwelling prices over the last year, too. Such news is promising for existing homeowners looking to sell in the future, as they may well have seen strong capital growth for their properties.