A raft of positive economic data has encouraged the Reserve Bank of Australia to leave the official cash rate on hold.
The news comes just one month after the Board decided to slash the cash rate by 25 basis points, taking it to 1.75%.
When discussing its latest cash rate decision, the Reserve Bank said it was prudent to leave the official cash rate on hold until they understood the full impact of last month's rate cut.
Since cutting the cash rate in May, consumer sentiment and property prices have both rebounded.
Data from the Westpac Melbourne Institute of Consumer Sentiment found confidence surged 8.5% over the month of May – to the point where optimists significantly outnumber pessimists.
In addition, property prices across the combined capital cities climbed 1.6% in May – taking values 10.0% higher over the 12 months to June.
Sydney was once again the standout performer, with property values surging 3.1% throughout the capital city. Over the last 12 months, property values have climbed by more than 13% in both Sydney and Melbourne, which highlights the ongoing strength of these two property markets.
This data, combined with the improvement in consumer confidence, gave the Reserve Bank all the incentive it needed to leave the official cash rate on hold this month.
Furthermore, the data clearly suggests last month's rate cut was the right decision by the Reserve Bank.
Moving forward, economists are divided over whether or not we will see another rate cut this calendar year.
Depending on what impact next month's Federal election has on consumer sentiment and other economic indicators, we may still see at least one more rate cut this year.
Regardless of what happens with interest rates in the future, the fact is home loan rates have never been lower than they are at current.
Today, some lenders are offering interest rates as low as 3.89%. With that in mind, if it has been a while since you reviewed your home loan, now is the perfect time to do so.
You may find there is another product on the market that is not only better suited to your needs, but also boasts a sharper price – helping you to save thousands of dollars over the life of your loan.