July 07, 2015
RBA to keep a close eye on global economy
Board leaves rates on hold for 2nd month
Strong property price growth in Sydney and Melbourne combined with growing problems abroad has encouraged the Reserve Bank of Australia to leave the cash rate on hold.
At today’s Board meeting, the RBA decided to err on the side of caution, leaving the cash rate on hold at 2% for the second consecutive month.
Mortgage Choice franchisee Des Nation said the RBA’s decision “made sense”, all things considered.
“Recent research conducted by RP Data shows property values continue to climb in both Sydney and Melbourne,” he said.
“Prices rose by 2.8% in Sydney and 2.9% in Melbourne in June alone. What makes this growth even more impressive is that it comes at a time when many of Australia’s lenders have started to tighten their investment lending policies.
“If rates were cut, property prices could climb even further – a fact the Reserve Bank is acutely aware of. As such, it makes sense for them to leave rates on hold and hope that the changes being made by the banks to investment lending policies will be enough to help slow investor demand and, in turn, property price growth in both Sydney and Melbourne.”
Mr Nation said ongoing turmoil in Greece would have further encouraged the Reserve Bank to leave their powder dry today.
“Following Greece’s ‘no’ vote at its recent referendum, the Australian dollar has plummeted, hitting its lowest level since 2009,” he said.
“With this in mind, there is no immediate reason for the Reserve Bank to cut rates.”
But while the Reserve Bank of Australia decided that no rate change was the best course of action for now, Mr Nation said future rate cuts cannot be ruled out.
“The Reserve Bank is likely to take a ‘wait and see’ approach to rates. They will continue to closely monitor the problems in Greece, as well the local economy, consumer sentiment and property price growth in Sydney and Melbourne,” he said.
“If any of these areas give them cause for concern, they will not hesitate to pull the rate lever. They have done it before and there is nothing to stop them from doing it again this year.”
If you want to learn more about your home loan options, call (02) 9833 8177 or visit www.mortgagechoice.com.au/Des.Nation
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This article is for general information purposes only. It has been prepared without considering your objectives, financial situation or needs. You should, before acting on the advice, consider its appropriateness to your circumstances.
About Mortgage Choice
Mortgage Choice is an ASX listed company that seeks to help Australians with all of their financial needs.
Established in 1992, Mortgage Choice was originally established to help Australians improve their financial situation by offering a choice of home loan providers, coupled with the expert advice of a mortgage professional.
Since that time, the company has grown and developed into a fully fledged financial services provider.
Today, Mortgage Choice helps customers source car loans, personal loans, credit cards, commercial loans, asset finance, deposit bonds, and risk and general insurance.
Further, the company offers Australians access to real, relevant and affordable financial advice through our qualified financial advisers.
Mortgage Choice has no balance sheet or funding risk, and consistently delivers strong profits and attractive yields. It listed on the ASX in 2004 (MOC) and is a member of the Mortgage & Finance Association of Australia (MFAA).
Mortgage Choice holds an Australian Credit Licence: no. 382869 and Mortgage Choice Financial Planning Pty Limited holds an Australian Financial Services Licence: no. 422854. Both licences are issued by ASIC.
Recent recognition: 2014 Australian Broking Awards Best Diversified Program; 2013, 2012, 2011 Australian Broking Awards Major Brokerage of the Year – Franchise; 2013, 2012 Australian Broking Awards Best Ethical/Social Responsibility Program; 2012 Australian Broking Awards Best Training and Education; No.1 on The Adviser magazine’s 2012, 2011, 2010 and 2009 Top 25 Brokerages list; 2012, 2010, 2009, 2008, 2006 and 2005 MFAA Awards Retail Aggregator/Originator of the Year; 2011, 2010, 2009 and 2008 10 Thousand FEET Top 10 Franchise list; 2010 Forbes Asia-Pacific Best Under A Billion list.
Visit www.mortgagechoice.com.au or call customer service on 13 77 62.