November 07, 2017
While most of the nation was preoccupied with the events taking place at Flemington Racecourse, the Reserve Bank of Australia still met to discuss the monetary policy setting.
In an unsurprising move, the Board opted to leave the cash rate on hold once again.
Today's decision marks the 15th consecutive month that the Reserve Bank has left the official cash rate on hold at the historically low setting of 1.5%.
Mortgage Choice chief executive officer John Flavell labelled the decision ‘unsurprising' and a ‘safe bet'.
“The latest data would suggest the Australian economy is performing relatively well at the moment,” he said.
“Property price growth has started to slow across some markets, which is largely in line with expectations. At the same time, we are starting to see signs of improvement in consumer sentiment and business conditions, while unemployment remains low by historical standards.”
According to the latest data from CoreLogic, there was no increase in property values across the combined capital cities over the month of October.
In fact, median dwelling values actually fell in Sydney, Darwin and Canberra last month.
In Australia's largest city, property prices slid 0.5% over the course of October, taking Sydney's median dwelling value to $905,917.
Mr Flavell said this stagnation in property price growth has been foreseen for ‘some time'.
“Over the last 12 months, we have seen a significant shift in lending policy. For some borrowers, specifically international investors, it has become harder than ever to qualify for a home loan and this has, understandably, had an impact on property demand and, in turn, property price growth,” he said.
“I think the Reserve Bank would be buoyed by the fact that property price growth has started to slow. When you combine the sluggish property price growth result with the fact that optimists have, for the first time since November 2016, started to outnumber pessimists, then it is fair to assume that the Reserve Bank's prolong period of interest rate stability is having the desired effect on the Australian economy.
“In addition to a lift in consumer optimism, we have seen an uptick in employment, with the unemployment rate now sitting at 5.5%, which is effectively full employment.”
Of course, while the Reserve Bank has once again chosen to leave the cash rate on hold, that doesn't mean home loan interest rates will remain fixed at their current levels.
“We have seen so much movement in interest rates across the mortgage market in recent months and I do not expect this to change any time soon,” Mr Flavell said.
“In recent weeks, we have started to see some lenders adjust their fixed rate pricing and make further changes to their interest only pricing and policy.”
Regardless of a person's individual circumstances, Mr Flavell said now was the right time for people to review their financial situation and make sure they are in the right product for their needs.
“It is a complex market so it is important for buyers and borrowers to speak to a local mortgage professional.”