July 01, 2014
1 July 2014
RBA leaves rates on hold again
The Reserve Bank of Australia has failed to shock industry pundits, with the Board opting to leave the official cash rate on hold for the 11th consecutive month.
At its Board meeting earlier today, the Reserve Bank announced its plans to leave the cash rate on hold at 2.5 per cent.
Mortgage Choice franchisee Des Nation said the RBA’s decision would likely be based on the fact that consumer sentiment remains fairly sluggish and property values slid slightly over the month of May.
“According to the latest Westpac Melbourne Institute of Consumer Sentiment, confidence climbed just 0.2 per cent in June. Overall, consumer sentiment remains 6.6 per cent below the pre-Budget level recorded in April and 15.6 per cent below the post-election high recorded in November last year,” Mr Nation said.
“The absence of a significant bounce in June was disappointing. Often, the initial response to a Budget can be an overreaction that reverses in the following months. However, this doesn’t seem to be the case with the latest Budget. The Reserve Bank understands this and has therefore decided to leave the official cash rate on hold for another month.”
On top of sluggish consumer sentiment, Mr Nation said the Reserve Bank would have also been swayed by the fact that property values have remained fairly flat over the last quarter.
“Research conducted by RP Data found property values rose by 1.4 per cent in June after posting a 1.9 per cent drop in May,” he said.
“Over the last quarter, dwelling values have remained fairly stagnate. Sydney currently leads the pack, with values climbing just 1 per cent in the capital city over the last three months. At the other end of the scale, Melbourne has endured the biggest fall in values, with the city recording a 2.4 per cent drop over the quarter.”
Moving forward, Mr Last Name said she expects to see the Reserve Bank of Australia leave the official cash rate on hold for some time yet.
“Given that the outlook for the economy remains relatively strong and there is already a significant degree of monetary stimulus in place to support economic activity, it seems unlikely the RBA will move rates in the immediate future,” he said.
“In fact, in the minutes of the RBA’s June meeting, the board judged that the “current accommodative stance of policy was likely to be appropriate for some time yet”.”
With this in mind, Mr Nation said now is a good time for potential buyers to seriously consider jumping onto the property ladder.
“Rates continue to hover around record lows. Further, some of the heat is starting to come out of the property market. So, for those who have the ability to buy, now is a really good time to do so,” he said.
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 a fully fledged financial services house, offering both mortgage broking and financial planning services.
Established in 1992, Mortgage Choice has sourced a home loan for well over 350,000 Australians from its extensive panel of leading lenders.
Today, many of its brokers provide a broader service, helping customers source commercial and personal loans, asset finance, deposit bonds and providing referrals for risk and general insurances.
In addition, to cater to the growing needs of our customers, Mortgage Choice has officially integrated financial planning into the business.
The company 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).
Recent recognition: 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.
Mortgage Choice holds an Australian Credit Licence: no. 382869 and Mortgage Choice Financial Planning Pty Limited, a fully owned subsidiary of Mortgage Choice, holds an Australian Financial Services Licence: no. 422854. Both licences are issued by ASIC.
Visit www.mortgagechoice.com.au or call customer service on 13 77 62.