October 06, 2020
The Reserve Bank of Australia (RBA) has today made the decision to maintain the cash rate target at 0.25% at its October monetary policy meeting.
Speaking about the RBA’s decision, Mortgage Choice CEO Susan Mitchell said, “RBA Board members are waiting to see what is delivered at the Federal Budget 2020 before making changes to the cash rate.
“The highly anticipated 2020/21 Budget is expected to provide stimulus to support the nation’s economic recovery in the form of tax cuts, infrastructure investment, renewed JobSeeker and JobKeeper policies and an expanded HomeBuilder Scheme.”
“The Government has already announced the extension of the First Home Loan Deposit Scheme. This will enable an extra 10,000 buyers who build new homes to get into the property market with a deposit as low as 5% from October 6 until June 30 2021. The Government expects the scheme to drive more construction and support job growth.”
“The historically low interest rate environment and unprecedented levels of government support has insulated the housing market to shocks from the pandemic so far. While the housing market faces headwinds, performance is improving. The CoreLogic Hedonic Home Value Index revealed that six of the eight capital cities recorded a rise in home values, however Sydney and Melbourne recorded a fall of 0.3 and 0.9% respectively. National dwelling values fell 0.1% over September.”
“Fiscal and monetary policy support will be required to support the weakened labour market and sluggish wage growth. The latest data from the The Australian Bureau of Statistics revealed the unemployment rate decreased to 6.8% in August and the RBA forecasts high unemployment through to 2022.”
“Pleasingly, the Westpac-Melbourne Institute Index of Consumer Sentiment surged by 18% in September, with consumer confidence returning to more normal levels.”
“Meanwhile, the NAB Monthly Business Survey saw a modest improvement in September driven by a rise in improving activity as the economy opens up. Confidence also saw a further improvement but remains in negative territory.
“The Federal Government appears committed to supporting the nation’s housing market. Historically low interest rates, unprecedented levels of government support for home buyers and changes to responsible lending laws should support activity in the housing market going forward.”
“I would encourage any first time buyers, or borrowers looking to refinance their home loan to speak to their local mortgage broker to understand their options. The home loan market is extremely competitive at the moment so it’s a good idea to engage the guidance of an experienced mortgage broker who can help you find the right loan for your unique financial needs,” concluded Ms Mitchell.