Could now be the right time to borrow?

By Kevin Kelly

Knowing economic conditions are just right is an important part of deciding when to buy real estate in Bunbury South, which could explain why the market is performing so well at the moment.

The official cash rate as set by the Reserve Bank of Australia (RBA) has been at an all-time low of 2.5 per cent since August 2013 and it seems the nation's borrowers are making the most of it.

In its most recent Financial Stability Review, the RBA explained how borrowers are using the low cash rate environment to make extra repayments on their mortgage.

This is likely to be especially common among those on variable rate products, as the reduced cash rate means they might be paying less in compulsory payments than when they first took out the loan.

RBA analysis also suggested people are generally in a better financial position now than they had been in the past, giving them extra incentive to repay their home loan faster.

There's no guarantee that the cash rate will stay this low for much longer, with the RBA board's next meeting scheduled for 7 October.

Many analysts believe interest rates will remain low until next year, but when exactly a rise will occur is very much open to debate.

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