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Empower Wealth Blog post by Empower Wealth

Rental Yields Vs. Term Deposits

With the further cut in the cash rate announced this month by the RBA, the banks will shortly start to announce their new savings deposit rates, which are coming down with each cut.

Some commentators are talking about the cash rate getting as low as 2.5% which means it’s cheaper for the banks to access money from the RBA than via customers’ deposits.  So the question is how low with these new cash deposit returns be (2 – 3%).

When you consider that across the country there are many areas and specific properties that are currently yielding returns of 5-7%. In fact a recent RP Data – Rismark Daily Home Index tells us that the average rental yield across Australia is now 4.3%.

The other glaring potential benefit for those on the property side of the fence is the potential for capital growth to boost returns. That is certainly something to consider given the current returns being offered elsewhere.

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