February 06, 2024
At today’s February monetary policy meeting, the Reserve Bank of Australia (RBA) held the nation’s official cash rate steady at 4.35%.
Speaking about the decision, Mortgage Choice CEO, Anthony Waldron, commented, “The Reserve Bank’s decision to keep the cash rate on hold was not surprising given the December figures from the Australian Bureau of Statistics (ABS), which showed inflation slowing and a large fall in retail spending over the typically higher Christmas period.
“This hold decision will be welcomed by buyers and borrowers around the country. The Mortgage Choice brokers I’ve spoken with as the year gets underway are reporting a strong sense of optimism in the market.”
Mortgage Choice home loan submission data indicates borrower sentiment is positive as just 2.00% of loans submitted had a fixed component, with most customers opting for variable rate home loans in January.
“Bond traders and the money market have brought forward predictions for a rate cut to the second half of 2024, but the Reserve Bank has been clear it wants to see inflation return to the target band of 2.00–3.00%,” Mr Waldron added.
The ABS data showed that Consumer Price Index (CPI) inflation rose 0.60% in the December 2023 quarter and 4.10% annually, the smallest quarterly rise since the March 2021 quarter. ABS Retail Trade data showed that retail turnover fell 2.70% (seasonally adjusted) in December 2023, caused by a fall in discretionary spending. ABS Labour Force Survey also revealed that the seasonally adjusted unemployment rate remained at 3.90% in December.
PropTrack economist, Anne Flaherty said “Today’s decision is good news for the housing market which looks set to benefit from a more stable interest rate environment in 2024. Greater confidence around where interest rates are sitting should support further recovery in buyer and seller confidence.”
The latest PropTrack Home Price Index revealed that national home prices were relatively flat in January, lifting just 0.02%. Prices across the combined capital cities were steady, following a modest fall in December. The pace of home price growth continues to slow, with prices flat since October.
“The new year is well underway, making it a great time to put property plans into action. I encourage anyone with the goal of buying their first or next property to meet with their local Mortgage Choice broker. Your broker will help you understand your borrowing power and navigate the application process for a loan that suits your needs. If you already have a home loan, this is a great time of year to meet with your broker to review your loan and explore your options,” said Mr Waldron.