Login
ISCOVER
Jessica Darnbrough
The Reserve Bank of Australia has failed to surprise industry pundits, with the board opting to leave the cash rate on hold.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
Earlier today, the RBA indicated that the current 3 per cent monetary policy setting was “appropriate”, and therefore decided to leave the cash rate on hold in April.
According to RP Data’s Tim Lawless, on the whole the Australian economy and property market are fairing quite well – especially in comparison to the rest of the world.
“The latest housing market indices from RP Data and Rismark International, which showed another rise in dwelling values across the capital cities in March, would have provided further reassurance to the Reserve Bank that the previous rate cuts are taking affect,” Mr Lawless said.
“Based on RP Data's index to the end of March, capital city dwelling values have risen by 4.7 per cent since bottoming out in May last year, with every capital city housing market recording a rise in home values.
“Rents and investor yields are also rising, as are transaction volumes. Pretty much every market indicator is pointing to a further recovery in the housing market; clearance rates are higher, homes are selling faster and vendors are discounting their prices by less.
“The broad based recovery in housing market conditions, together with the strong labour market data for February, high consumer confidence and an improving share market, are all factors that are likely to keep interest rates at their current setting.”
Mr Lawless’ comments were echoed by Loan Market’s Paul Smith who agreed that the positive numbers coming out of sectors such as housing meant the decision to keep rates on hold was widely expected.
“The RBA has indicated that the inflationary pressures that prompted many of the rate cuts in 2012 have eased. The RBA believes that a 3 per cent cash rate is currently the correct level to grow the economy at it’s targeted pace,” Mr Smith said.
Mr Smith said that homeowners would still benefit from lenders who would continue to adjust their interest rates, regardless of RBA rate movement, to attract new customers and retain current ones.
“Cost-of-funds issues have eased for many banks - many Australian savers would have seen evidence of this by the dropping interest rates on their savings accounts. This has opened the door for lenders to now move their rates independently of not just the RBA, but each other,” he said.
