Reserve Bank: Cash rate retained at 2.5 per cent

By the resi financial blog team, 29 October 2013

Cash rate stays at 2.5 in October 2013

Since the Reserve Bank of Australia began easing monetary policy back in 2011, the official cash rate has dropped by a huge 2.25 percentage points, coming to rest at 2.5 per cent back in August of this year.

During this period, the housing market has begun to regain confidence, with more people taking out home loans, whether for their first home or in order to start their investment property portfolio.

Yesterday (October 1), the Reserve Bank made the announcement that the cash rate will remain at 2.5 per cent for the time being, which is good news for many Australians considering taking out a home loan and purchasing property in the near future.

Glenn Stevens, governor of the Reserve Bank, said that the decision to retain the rate was due, in part, to the historically low cut's effect on the housing industry.

"The pace of borrowing has remained relatively subdued to date, though recently there have been signs of increased demand for finance by households," said Mr Stevens in an October 1 statement.

This rising confidence is being experienced in most places across the nation, with many individuals taking the plunge and beginning their real estate adventure while the home loan interest rates are so low.

Speaking on behalf of the Real Estate Institute of Australia, Chief Executive Officer Amanda Lynch said in an October 1 statement that housing affordability is now at its lowest point in a decade.

"Nationally, it now takes 28.7 per cent of the median family income to meet average loan repayments," said Ms Lynch.

She went on to state that rates needed to stay low for an extended period of time in order for first home buyer confidence to return and for building activity to increase significantly across Australia.

Categories: Home Loans, Property Investment