RBA lifted by improvements in domestic economy
Board leaves rates on hold for 4th month
A strong bounce back in consumer sentiment and sustained property price growth has encouraged the Reserve Bank of Australia to leave the official cash rate on hold for the fourth consecutive month.
“At its Board meeting earlier today, the Reserve Bank said it was prudent to leave the cash rate on hold at 2% for another month,” Mortgage Choice franchisee Des Nation said.
“Over the last month, the domestic economy has shown signs of improvement, with building approvals, consumer sentiment and property prices all on the rise.
Data from the Australian Bureau of Statistics found the number of dwelling units approved over the month of July soared 4.2%, which is a good sign for the housing market and broader community.
“In addition to improving building approval numbers, data from the Westpac Melbourne Institute of Consumer Sentiment found confidence climbed 7.8% in August to 99.5.”
While there were no significant milestones or events to warrant the bounce back in confidence, Mr Nation said ongoing positive news around house prices may have buoyed confidence.
“Over the last quarter, property values across the combined capital cities have continued to climb, soaring 5.5%,” he said.
“Most recently, data from Core Logic found property values climbed 0.3% across the combined capital cities over the month of August.
“Sydney was once again the standout performer, with dwelling values climbing 1.1% across the capital city last month.”
Given that property values continue to climb at a fairly significant pace, Mr Nation said the Reserve Bank are understandably hesitant to cut the cash rate again quickly.
“If rates are cut again, it could cause a spike in home buyer demand, which could force property prices higher still,” he said.
“The Reserve Bank is acutely aware of this, which is why they have decided to leave the cash rate on hold.”
But while the Reserve Bank left the cash rate on hold at 2% for the fourth consecutive month, Mr Nation said future rate cuts couldn’t be ruled out.
“The Board will continue to keep a close eye on both the domestic and global economy. And, if the need for another rate cut arises, we know the Reserve Bank won’t hesitate to act,” 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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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.