No surprises as RBA holds rates
For the tenth consecutive month the Reserve Bank of Australia (RBA) decided to keep interest rates at a record low and hinted rates would remain steady for the next several months.
Loan Market director Mark De Martino said the predictability and consistency over the cash rate in the past several months has been very beneficial for homeowners and buyers.
“The RBA is doing it’s part to bring confidence to the market. The Australian Bureau of Statistics (ABS) is reporting 11 per cent growth in home loan approvals this year compared to last, and 13 per cent compared to 2012,” Mr De Martino said.
Mr De Martino pointed out that two years ago the cash rate was at 3.50 per cent and the one per cent drop was helping consumers save and pay off their home faster.
“A one percent drop can save someone on a $300k mortgage nearly $200 on their monthly repayment - that’s a very significant saving. Without the RBA dropping rates, homeowners wouldn’t be saving this money,” he said.
Mr De Martino pointed out that RBA governor Glenn Stevens made it clear it was difficult to determine not just when the next rate movement would be, but if it would be up or down.
“The RBA’s mandate is to protect not just the homeowners of the country, but the growth of each sector of the economy. Low interest rates have been great for home loan growth and it’s also aiding other areas of the economy such as construction and property.
The high Australian dollar is mitigating some of the pressures to move rates downwards and it’s definitely one of the key areas to watch in the next few months.”
Mr De Martino predicted the RBA’s July and August decisions would also be to hold, which would leave the RBA’s cash rate on hold for the longest period since 2006.