March 07, 2017
For the seventh consecutive month, the Reserve Bank of Australia has decided to leave the official cash rate on hold.
Mortgage Choice chief executive officer John Flavell said the decision was “expected”.
“In recent weeks, the Reserve Bank of Australia's governor, Philip Lowe, has made it clear that future cuts to the cash rate are now more unlikely than likely,” he said.
“In his opening statement to the House of Representatives Standing Committee on Economics, Mr Lowe suggested that the current monetary policy setting remained appropriate for achieving sustainable growth in the economy.
“And he certainly seems to be right, with recent data suggesting the Australian economy is tracking along quite well.”
Economic growth rebounded strongly in the December quarter, smashing economist expectations.
Gross Domestic Product rose 1.1% from the September quarter, beating the anticipated 0.8% rise.
In addition, consumer sentiment rebounded slightly in February. According to the Westpac Melbourne Institute Index of Consumer Sentiment, confidence climbed 2.3% throughout the month.
Meanwhile, research conducted by CoreLogic found property values rose by 1.4% across the combined capital cities over the month of February.
“Sydney was once again the standout performer, with median values climbing 2.6% across the capital city throughout the month,” Mr Flavell said.
“From this data we can see that the Australian economy is tracking along quite nicely at the moment, so it wasn't surprising to see the Reserve Bank opt to leave the cash rate on hold for another month.”
But while the Board decided to leave the cash rate on hold once again, Mr Flavell said the market is anything but stationary, with many of Australia's lenders tweaking their pricing and policy in recent weeks.
“Over the last month, we have seen a number of lenders put additional restrictions on their investment lending, specifically on refinancing in this space,” he said.
“In addition, some lenders have lifted the rates across their suite of investment loans in a bid to curb activity in this area. In some instances, we have seen interest rates rise by as much as 25 basis points.
“More broadly, volatility in the global and domestic markets has put a lot of pressure on wholesale funding costs, which has forced some lenders to lift both their fixed and variable rates.”
Looking ahead, Mr Flavell said he wouldn't be surprised to see more lenders move their rates out of cycle with the Reserve Bank.
“Even if rates do continue to move north, it is important for all borrowers and potential buyers to understand that the cost of borrowing is still sitting at near historical lows,” he said.
“Now is still a great time to be a property buyer, investor or refinancer.
“Anyone who hasn't reviewed their mortgage in more than 12 months, should take the time to speak to their local broker and make sure they are still in the right product for their needs.”
