April 06, 2021
The Reserve Bank of Australia (RBA) has today made the decision to maintain the cash rate target at 0.10% at its April monetary policy meeting.
Speaking about the decision, Susan Mitchell, CEO of Mortgage Choice said, “The latest decision from the Reserve Bank comes as no surprise when you consider the unemployment rate and inflation are some way off the RBA’s targets.”
“The Australian Bureau of Statistics (ABS) labour force survey recorded strong employment growth over February, however the unemployment rate remains high at 5.8%. ABS data also reveals wages growth is lacklustre and low inflation persists.”
“The Australian housing market, which is being fuelled in large part by the low interest rate environment and a lack of housing supply, continues to outperform expectations.”
“The ABS’ Housing Finance data shows demand for housing finance remains strong despite a fall in February. Interestingly, the ABS data revealed investor finance approvals out-performed owner-occupiers and first home buyers, rising 4.5% in February but remains near historic lows.”
“Moreover, the latest CoreLogic Hedonic Home Value Index revealed a 2.8% rise in dwelling values in March, the fastest pace of growth in 32 years. This was supported by a 3.7% rise in Sydney, bringing values 2.6% higher than their July 2017 peak.”
Ms Mitchell said, “Despite no change to the cash rate, I urge borrowers to review their home loan interest rate as soon as possible to ensure you’re not paying too much. Interest rates remain at record lows, both for variable rate and fixed interest rates, however we are starting to see some lenders raise interest rates particularly on 4-year and 5-year fixed home loans. With the RBA’s term funding facility set to end in June, further upward pressure on fixed interest rates may continue later this year.”
“Borrowers seeking certainty in their home loan repayments continue to fix part or all of their home loan. Mortgage Choice monthly approval data reveals that demand for fixed rate home loans reached a new high with 38% of loans having a fixed component over the month of March 2021 - this is even higher than the 2020 peak in July 2020 at 34%.”
“Australians looking to enter the property market for the first time, or those hoping to buy their next home should speak to their local Mortgage Choice broker to put their best foot forward when applying for a home loan. The market is incredibly competitive at present so it’s important you have an expert on your side to give you choice and help you find the right home loan product for your individual needs,” concluded Ms Mitchell.