The Reserve Bank of Australia has kept rates on hold at 1.5% after its first meeting for 2017.
The decision to leave the cash rate on hold today came as no surprise to those following our economy.
To better understand the decision, here are 3 experts views:
Martin Lakos ( Macquarie) comment:
The first RBA Board meeting for 2017 was held on Tuesday 7 February and rates were kept on hold at 1.5%.
This decision reflects recent Australian inflation and business confidence figures, against a backdrop of modestly improving global growth.
The next RBA board meeting will be held on Tuesday 7 March.
Source: Macquarie
Tim Lawless (Corelogic) comments:
The hold decision from the RBA was widely anticipated, especially considering the strength in the housing market over the second half of 2016 as well as the consistent rise in investment activity since the latest round of rate cuts in May and August last year.
With inflation consistently tracking below the RBA’s target range for almost three years, it’s likely that the heat in the housing market is one of the primary reasons why the cash rate hasn’t moved lower in an attempt to stimulate spending and push inflation higher.
CoreLogic reported capital city dwelling values were 10.7% higher over the past twelve months, which is a substantially higher growth rate than the 7.4% recorded over the same period a year ago.
The acceleration in the pace of capital gains highlights that housing market conditions have rebounded in line with the previous rate cuts and the consistent rise in investor participation.
While any further rebound in the headline rate of growth would be unwelcome, some cities could have used the additional stimulus of a cash rate cut.
Housing market conditions in Perth and Darwin have been weak since 2014, with dwelling values having fallen in both cities over the past twelve months.
Despite the cash rate remaining on hold and some subtle upwards movement in mortgage rates over recent months, the cost of debt remains historically low which should continue to see strong demand for housing from both owner occupiers and investors.
Peter Arnold (Ratecity.com.au) Comment:
The RBA has met market expectations by keeping the cash rate on hold at 1.5 per cent at this afternoon’s Board meeting.
Yet, as official rates remain steady for six months (five consecutive Board meetings), banks continue to lift home loan rates.
A new RateCity.com.au study shows 33 lenders – including two major banks, ANZ and NAB, – have lifted some of their popular home loan rates in recent weeks.
A total of 382 home loan rates, including 265 fixed and 117 variable products, have been hiked since January 1.
Lenders had lifted home loan rates by as much as 0.60 percentage points.
After several years of record low rates, Australian home owners are facing unwelcome news to start the year as more banks quietly raise rates on their mortgages,” he said.
The banks began lifting home loan rates late last year, with the biggest hikes being applied to their fixed deals at the time.
As a result, most of the impact last year was felt by new customers who were looking to fix their home loans and were prepared to cop the higher rates on the chin.
But that’s about to change.
The difference now is that more variable rates are under attack, with 117 hikes in the last five weeks largely hitting existing customers.
This is just the start for higher rates and we expect this trend to continue as banks face higher lending costs both from nervous international funding sources and increased pressure from our local regulator to hold more capital.
Latest data shows that the proportion of people falling behind on their mortgage repayments reached the highest point in three years last year, and as rates increase further it could really hurt a lot of Australian homeowners.
Variable borrowers should get set for higher expenses this year or be prepared to switch.
Either way, we’d urge homeowners to keep an eye on their rate and the market so they have increased negotiating power for when that time comes.
Source: www.ratecity.com.au
from Property UpdateProperty Update http://propertyupdate.com.au/3-experts-comment-on-the-february-rba-interest-rate-decision-video/
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