RBA leaves cash rate on hold again

A lift in business sentiment combined with strong housing approval numbers has encouraged the Reserve Bank of Australia to leave the official cash rate on hold this month. At its Board meeting yesterday, the Reserve Bank decided to leave the cash rate on hold at 2.5% for the seventh consecutive month.

Ongoing strength in the Australian economy has given the Reserve Bank some much needed confidence in the current monetary policy setting. The latest Monthly Business Survey conducted by National Australia Bank found business confidence is currently enjoying positive momentum, with business confidence recording its first rise in four months. Further, data from the Australian Bureau of Statistics shows home loan approvals are also on the rise, lifting 0.2% in December 2013.

Total dwelling commitments continue to increase month on month, which suggests the Reserve Bank’s previous rate cuts are finally starting to take effect. On top of the strong home loan approval data and surging business confidence, consumer confidence currently remains comfortably in the zone where optimists outnumber pessimists. The Australian economy is starting to show some real strength. As such, it is no surprise to see the Reserve Bank of Australia leave the official cash rate on hold again this month.

Moving forward, we expect the Reserve Bank to err on the side of caution and leave the cash rate on hold for the foreseeable future, which should encourage a greater number of potential home buyers onto the property ladder as they look to take advantage of the low interest rate environment.

Of course, it is not just potential home buyers that can benefit from the current market conditions. Now is also a good time for property owners to review their current home loan and check to make sure they are still in the right product for their needs.

If you want to learn more about your home loan options please feel free to give me a call on 0405375550.

Posted in: Interest rates

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