The Reserve Bank of Australia (RBA) has once again made the decision to leave the nation’s official cash rate (OCR) unchanged at 1.50%, where it has been since August 2016.
There are a few key reasons why the RBA has decided to hold the cash rate again.
History shows us that the RBA does not move on the cash rate in the middle of an election campaign for fear of making its decision a political football.
Domestic economic factors such as inflation data play a key part in the Bank’s decision. The March quarter Consumer Price Index (CPI) revealed disappointing inflation rates. The RBA targets an inflation rate between 2-3% and these recent figures suggest inflation is unlikely to meet this target by the end of the year.
When the RBA board members met to make their April cash rate decision, members noted the economic circumstances which would make a valid case for a rate cut such as flat inflation and unemployment trending up. Despite consistently lacklustre inflation, the unemployment rate remains at near historic lows.
The most recent Labour Force data from the Australian Bureau of Statistics (ABS) revealed a seasonally adjusted unemployment rate of 5.0% in March, which is near historic low levels.
The CoreLogic Hedonic Home Value Index revealed that the rate of decline of national dwelling values continues to ease, recording a 0.5% fall in April.
A weaker housing market is good news for those looking to buy their first property. This, coupled with the fact that home loan interest rates are hovering at historic lows, presents great buying opportunities for those looking to realise their property ownership goals this year.
If you are a first time buyer looking to secure your first home loan, it’s a good idea to start closely monitoring your living expenses and create good financial habits from today to increase your chances of submitting a successful home loan application.
If you are an existing borrower and you think now might be a good time to refinance your loan, speak to your local Mortgage Choice mortgage broker today to ensure you secure a competitive home loan deal suited to your unique financial goals and needs.