March 01, 2016
Unsurprisingly, the Reserve Bank of Australia has once again decided to leave the official cash rate on hold at 2%.
The decision marks the 10th consecutive month that the Board has opted to leave the cash rate untouched.
Mortgage Choice chief executive officer John Flavell said strong economic data, including stable employment and a bounce back in consumer sentiment, provided the Reserve Bank of Australia with no reason to change the official cash rate.
“According to the Westpac Melbourne Institute of Consumer Sentiment, confidence rose 4.2% in February, taking the Index to 101.3. As a result, optimists now outweigh pessimists.
“In addition to the recent bounce back in consumer sentiment, data from the Australian Bureau of Statistics shows the unemployment rate continues to remain relatively stable, while research conducted by CoreLogic shows property values continue to rise.
“Over the month of February, property prices climbed 0.5% across the combined capital cities, with Hobart, Adelaide and Brisbane the standout performers.
“In Hobart, property values climbed 2.9%, while in Adelaide and Brisbane values were up 1.9% and 1.8% respectively over the course of the month.”
Mr Flavell said this spate of positive data gave the Reserve Bank of Australia no reason to change the current monetary policy setting.
But while rates were once again left on hold, Mr Flavell said future rate cuts could not be ruled out.
“There continues to be a significant level of volatility in both oil prices and the share market. If this market volatility starts to have an impact on consumer and business confidence, we may see the Board react via another rate cut,” he said.
“Many analysts are already pencilling in at least one more rate cut before the end of the year.”
Regardless of what happens with the cash rate in the future, Mr Flavell said interest rates continue to hover around record lows, making now a good time to buy, invest or upgrade.
“For anyone who isn't happy with their current home loan provider or feel as though they could be getting a better deal, now is also a great time for property owners to review their home loan and make sure they are still in the right product for their needs.”