Strong business conditions give RBA reason hold rates

August 04, 2015
Yuhann Liu

The Reserve Bank of Australia has decided to leave the official cash rate on hold at 2% for the third consecutive month as new data shows business confidence is on the rise.

Data from National Australia Bank shows business conditions and confidence have benefited from the tax measures targeted at micro businesses in the Federal Budget, with conditions and confidence both rising by 2 points respectively.

This positive surge in confidence ultimately gave the Reserve Bank the incentive it needed to leave the cash rate alone. In addition, the Board is acutely aware of what is happening in the property market and is therefore keen to avoid dropping rates further in the immediate future in case it causes property demand to surge higher.

New research conducted by Core Logic shows property prices climbed 2.8% over the month of July, meaning values have now soared by 11.1% over the past 12 months. Melbourne and Sydney continue to be largely responsible for the overall growth in dwelling values, with the capital cities recording property price growth of 4.9% and 3.3% respectively over the course of July.

So hot is the demand for property at the moment, especially from investors, that the Australian Prudential Regulation Authority has put a cap on investment lending growth, which has forced many of Australia’s lenders to make some sweeping changes to their pricing and policy. If you are looking to invest in property or have a current investment loan, now is the time to seek expert advice.

I have access to hundreds of products from our panel of up to 25 lenders and can help you find a loan that’s right for you, or compare your current loan against others in the market to see if we can find you a better deal.

To book an appointment or just have a chat, please do not hesitate to contact me.

Posted in: Interest rates

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