The Reserve Bank of Australia has made the decision today to leave the nation’s official cash rate unchanged at 1.50%.
Despite the fact that some experts have been tipping a rate decrease is on the cards it still has not occurred.
Susan Mitchell Chief Executive Officer Mortgage Choice says “….. a range of economic factors are likely to encourage the bank to cut the rate, The Official Cash Rate’s function as an anchor to lenders’ interest rates shifted over 2018, as lenders were forced to respond to higher funding costs. Moreover, markets are pricing in a 90% probability of a rate cut by August this year, adding further pressure on the RBA to change its long-held stance on monetary policy,” said Ms. Mitchell.
Mortgage Broker from Time Home Loans, Ruan Burger, believes reasons behind the decision are “… strong employment figures and continued low global interest rates, offsetting continued concerns around falls in housing prices.”
The most recent CoreLogic Hedonic Home Value Index revealed that national dwelling values fell by 0.6% over March and have fallen by a cumulative 7.4% since peaking in October 2017.
The most recent data from the Australian Bureau of Statistics revealed that the number of dwelling commitments to owner-occupiers fell 2.6% over January 2019.
Mortgage Choice’s Ms. Mitchell said today’s strict lending practices, born out of lenders’ self-imposed tightening in the wake of the Banking Royal Commission, continues to play a part in the slowing property market. This places greater importance on the need for future home buyers and borrowers alike to get in shape financially.
In a statement after the RBA’s announcement, Tim Lawless from Core Logic said, “The ongoing falls in dwelling values have the potential to weigh down consumer attitudes towards spending and cause a sharper than anticipated fall in residential construction activity.”
Lawless also believes “We will see some downward revisions to the RBA’s forecasts for economic growth and inflation which could set the scene for lower rates over the second half of the year.”