June 01, 2021
The Reserve Bank of Australia (RBA) has announced it will continue to keep the nation’s official cash rate on hold at 0.10% at its June monetary policy meeting.
Speaking about the decision, Mortgage Choice CEO Susan Mitchell said “today’s decision is unsurprising given the RBA’s latest Statement on Monetary Policy, which reinforced that the cash rate would not rise until inflation is sustainably within its target and we see a further tightening of the labour market.
“Pleasingly, data from the Australian Bureau of Statistics (ABS) revealed that the unemployment rate continues on its downward trend, however, we’re a long way off seeing a marked improvement to wages growth. There are signs the nation's economic recovery is on track but the latest lockdown in Victoria is a reminder that monetary and fiscal support will be required for some time yet.
“In the meantime, Australians continue to take advantage of a record-low interest rate environment. Mortgage Choice home loan approval data reveals demand for fixed-rate home loans remains strong, with over 38% of loans in April having a fixed component. We have also seen strong refinance activity with the 12 months ending May 2021, recording an 18% increase in refinancing activity over the prior period.
“While the cash rate is not expected to change for the foreseeable future, we are seeing lenders raise interest rates on some fixed-rate home loan products. If the RBA’s term funding facility, which expires at the end of this month, is not renewed at the Board’s July meeting, we can expect further home loan interest rate rises.”
Ms Mitchell said there is still a lot of heat in the property market, with the latest CoreLogic Hedonic Home Value Index revealing national dwelling values rose 2.2% in May. The low-interest rate environment continues to support strong demand for property, with Sydney and Melbourne recording 3% and 1.8% growth over the month respectively.
“While today’s decision brings no change to the cash rate, I encourage all borrowers who haven’t had their home loan reviewed in over 12 months to speak to their local Mortgage Choice broker today. Your broker can provide you with a home loan health check to see if your home loan is still working for your needs.
“If you’re a first home buyer hoping to get your foot on the property ladder, my advice would be to speak to an experienced mortgage broker who can walk you through the home loan process and help you find a home loan that’s right for you,” concluded Ms Mitchell.