Loan Market Chairman: “rate decision is a good sign”

Chairman of Loan Market, Sam Whit said the RBA’s decision yesterday to hold the cash rate at 2.00 per cent shows the economy is stronger than what’s widely perceived.

“I think today’s decision is a good sign of strength in the economy. It shows that perhaps negative economic predictions have been overstated in recent times. From the perspective of the property markets, today’s decision is a sign that rates are potentially finding a bottom. With interest rates where they are, I think there is some truth to comments that they’re losing their stimulus impact. The proof is in what we see happening outside of the Sydney property market,” he said.

Mr White said holding the cash rate is a positive and gives the Government flexibility should bad times strike in the future.

“Although already at a record, keeping rates on hold gives the RBA some room to maneuver in the event we hit hard times globally. If the cash rate goes much lower, we won’t have any room to move if we’re shaken by world events,” he said.

Acknowledging the strength of the Sydney market, Mr White said yesterday’s announcement is unlikely to slow down activity.

“One of the biggest challenges over the next year will be the impact current interest rates have on housing affordability. There’s still a significant amount of pressure on Sydney house prices, which is challenging in the long term. We don’t have this concern outside of the Sydney market. If we can stabilise the Sydney market, it will offer long-term value and gives confidence to homeowners and investors,” Mr White said.