RBA leaves the cash rate on hold

By the resi financial blog team, 21 October 2013

RBA holds cash rates in October

At their monthly meeting yesterday (July 2) the Reserve Bank of Australia (RBA) decided to leave the official cash rate steady for another month at 2.75 per cent.

This is the second month in a row that the RBA has left the rate steady, after reducing it by 25 basis points in May.

RBA governor Glenn Stevens stated that the Australian economy has seen sluggish growth in recent periods, leaving it to be slightly below trend.

This is expected to continue over the near term as mining investment is beginning to slow down. In order to help the economy strengthen and stabilise, the RBA found it prudent to leave the rates on hold for another month.

However, with interest rates at historical lows the housing market has started to pick up as we see more investors entering the property market.

Commenting on the RBA's decision, Real Estate Institute of Australia (REIA) president Peter Bushby stated that recent declines in mortgage rates has helped to stimulate more demand from investors and non-first home buyers.

"The market has been reacting positively on the recent cash rate cuts. The first quarter of 2013 had the seventh consecutive improvement in housing affordability," said Mr Bushby in a July 2 statement.

“As published in the Adelaide Bank/REIA Housing Affordability Report, the proportion of income required to meet loan repayments decreased 0.5 percentage points to 29.9 per cent."

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Categories: Home Loans