February 04, 2020
In its first monetary policy meeting of 2020, the Reserve Bank of Australia has made the decision to keep the nation’s official cash rate on hold.
Today’s decision keep’s the cash rate at 0.75%, where it has sat since October 2019.
Speaking about the Board’s decision, Mortgage Choice CEO Susan Mitchell said, “Better than expected labour market data may have been reason enough to delay the Board’s next cut.
“It’s no secret that the RBA has been keeping a watchful eye on the nation’s jobs data so the latest development would have been welcome, and somewhat unexpected news to its Board members. According to the Australian Bureau of Statistics, the nation’s unemployment rate fell to 5.1% in December.
“The December quarter CPI rose 0.7% over the quarter and 1.8% over the 12 months to December 2019. While this result was better than expected, inflation is still well under the RBA’s target of 2-3%.
“Another reason the RBA may have decided to hold the cash rate this month is dwindling consumer confidence. The latest Westpac-Melbourne Institute Index of Consumer Sentiment revealed that consumer confidence fell over January due in part to the devastating bushfires. The low level of confidence is consistent with generally lacklustre reports on consumer spending and Board members. Pleasingly, the Index points to ongoing confidence in the housing market.
“Indeed, the turnaround we saw in the housing market in 2019 has continued into 2020 as dwelling value growth is supported by the low interest rate environment. The CoreLogic Hedonic Home Value Index revealed that Sydney and Melbourne recorded stand-out value growth in January, while national dwelling values rose 0.9% over the month. With interest rates at historic lows, I don’t see the strong demand for property abating any time soon,” said Ms Mitchell.
Looking ahead, Ms Mitchell expects future cash rate cuts to be just a matter of time.
“In the minutes of its December Board meeting, the RBA Board said it would be prepared to ease monetary policy further. Unless we see a dramatic improvement in key economic data, another cash rate cut is just around the corner. That being said, I question the impact another cut would have on home loan interest rates, which are already sitting at historic lows,” she said.
“In this extremely competitive interest rate environment, it could be a great time to realise your property ownership goals. If your New Year's resolution includes buying your first home, or investment property, now is a great time to speak to an experienced mortgage broker to learn what your options are.
“Make an appointment with your local Mortgage Choice broker today to learn how you can get home buying ready. And, when the time comes to apply for your loan, they will take all the legwork out of the home loan application process,” concluded Ms Mitchell.