RBA leaves cash rate on hold

The Reserve Bank of Australia (RBA) has decided at its February monetary policy meeting that it will keep the nation’s official cash rate on hold at 0.10%.

February 01, 2022

The Reserve Bank of Australia (RBA) has decided at its February monetary policy meeting that it will keep the nation’s official cash rate on hold at 0.10%.  

Speaking about the decision, CEO of Mortgage Choice and Smartline, Susan Mitchell said, “In its first monetary policy meeting of 2022, the Reserve Bank Board left the cash rate unchanged and announced the end of its bond buying program. 

“RBA Governor Philip Lowe has previously ruled out a cash rate rise this year but a higher-than-expected underlying inflation reading for the December quarter, mirroring the trend of rising inflation worldwide, and strong labour market data could see the RBA Board raise the cash rate in the second half of the calendar year. 

“Borrowers can expect stories about rising rates to dominate the media landscape in coming months, which makes now a good time to start having conversations with their broker about how to put their best foot forward for future rate rises. It's better to prepare early to help avoid rate-shock down the track. 

“Lenders continue to raise fixed home loan rates, while variable home loan rates remain at near-record lows. These changes are seeing borrower demand for variable rate loans rise, with Mortgage Choice home loan approval data showing that almost 70% of borrowers chose a variable rate for part or all of their loan in January 2022 – 3.1% higher than January 2021.” 

Data released today from the Australian Bureau of Statistics revealed new loan commitments for housing rose to a record high value of $32.8 billion in December.

The housing market has started the year strong but we’re unlikely to see the same level of growth we saw in 2021 given the threat of rising rates and affordability constraints. 

Paul Ryan, realestate.com.au economist said, "Demand from buyers remains robust across the country. Listings are coming onto the market as lockdown restrictions are now unlikely to disrupt campaigns, and many sellers who held off listing last year are coming to market.” 

Ms Mitchell said, “When the RBA does decide to raise the cash rate, the changes will be small and if you’re worried, there are things you can do to prepare so you feel in control.  

“Borrowers in a position to do so should consider making extra home loan repayments to get ahead of future rate rises, and any borrowers who haven’t had their home loan reviewed in 12 months or more should shop around for a better deal by speaking to your mortgage broker or bank.”  


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