August 03, 2021
The Reserve Bank of Australia (RBA) has decided it will keep the nation’s official cash rate on hold at 0.10%, maintain the target of 10 basis points for the April 2024 Australian Government bond and continue to purchase government securities at the rate of $5 billion a week until early September and then $4 billion a week until at least mid November its August monetary policy meeting.
Reacting to the RBA’s decision, Susan Mitchell, Chief Executive Officer, Broker at REA Group said, “The Delta-strain induced lockdowns have reinforced the need for agile fiscal and monetary responses."
“It’s remarkable how quickly the economic outlook can change from one month to the next. That being said, the economic data released in the lead up to the lockdowns was very strong and we’ve seen the Australian economy bounce back faster than expected from previous lockdowns.
“There have been several positive economic data releases over the last month. The Australian Bureau of Statistics’s Labour Force data revealed a strong labour market nationally, with the unemployment rate decreasing to 4.9% per cent in June - the lowest rate since December 2010."
“Furthermore, the Westpac-Melbourne Institute Index of Consumer Sentiment rose in June, despite the survey being conducted during lockdowns and restrictions in NSW."
“We continue to see strong demand for property, with Mortgage Choice experiencing in excess of $2 Billion in monthly applications on average since February," said Ms Mitchell.
The latest data released by the ABS revealed new housing loan commitments fell 1.6% in June 2021 (seasonally adjusted) but remained historically high.
Paul Ryan realestate.com.au economist said, “Demand continues to outstrip supply, which is driving price growth. The number of high-intent buyers on realestate.com.au remains very high, significantly above levels seen before the pandemic, despite the price growth over the past year. At the same time, many sellers have held off listing properties due to lockdowns potentially disrupting their campaigns. As a result, there is likely quite a bit of pent-up stock that will come onto the market when lockdowns end and there is more certainty for sellers.”
Ms Mitchell said, “The RBA will not be making changes to the official cash rate until further progress is made towards its inflation target and that’s unlikely to happen for some time. Even though we have seen some fluctuation in home loan interest rates, predominantly fixed-rates, Australians can continue to access some of the lowest home loan interest rates in history.”
“While the economy is experiencing headwinds, I am optimistic about the future. Pent-up demand post lockdown could see the property market activity soar to new highs and an increase in vaccinations should help the economy open up sooner.
“My advice to any Australian hoping to buy their first property, or refinance their existing home loan, is to speak to their local Mortgage Choice broker who can do the legwork to help you find the best deal suited to your unique financial situation,” concluded Ms Mitchell.