September 05, 2017
For the 13th consecutive month, the Reserve Bank of Australia has decided to leave the official cash rate on hold at 1.5%.
“Today's decision was largely unsurprising given the Board's recent rhetoric around rates,” Mortgage Choice chief executive officer John Flavell said.
“In the minutes of the August Board meeting, the Board acknowledged that a prolonged period of rate stability was consistent with sustainable growth in the economy and achieving the inflation target over time.”
Mr Flavell said in deciding the cash rate setting, the Reserve Bank undertook a delicate balancing act.
“The Reserve Bank is forced to consider domestic and global economic factors when making their cash rate decision,” he said.
“While there have been positive developments in both the global and domestic economies, there is still plenty of room for improvement.”
Data from the Westpac Melbourne Institute of Consumer Sentiment found confidence slid a further 1.2% in August, marking the ninth consecutive month where pessimists outnumbered optimists
“Increased pressure on family finances and interest rates has left Australian consumers feeling less than optimistic about their future,” Mr Flavell said.
“The Reserve Bank is acutely aware of this and understand that now is not the right time to adjust the monetary policy setting.”
In terms of property, the outlook is relatively robust, with data from the Australian Bureau of Statistics showing home loan demand remains strong. Over the last 12 months, in excess of 53,000 home loans were written each month for a total value of more than $33 billion.
“Increased home loan demand is putting greater pressure on the property market, which is resulting in higher property values across most of the capital cities,” Mr Flavell said.
“Sydney and Melbourne have led the charge over the last 12 months, with both capital cities enjoying dwelling value growth in excess of 10%.
“While we may see price growth ease slightly over the coming period, I expect property demand to remain strong as low rates continue to keep heat in the market.”
For those thinking of buying, investing or refinancing, Mr Flavell said now is a good time to do so.
“With the cash rate stable for yet another month, home loan rates will continue to hover around record lows, which will keep the cost of borrowing at very affordable levels,” he said.
“As such, now is the ideal time for Australians to look at their finances and think about their property ambitions – be it upgrading, renovating, investing or buying for the very first time.
“It is also important to take the time to speak to a professional. In a complicated market, it is always a good idea to talk to your bank or broker about your situation.”