In today’s news, the RBA have announced that they have decided to keep the cash rate as is – a record low of 0.75%.
A total of three cuts have been actioned since June 2019, but as we begin to slowly see positive changes to our economy, the Reserve Bank have made the decision to keep the cash rate stable.
A Good Sign for the Economy
With a much better than expected inflation percentage of 1.7% for the twelve months prior to September, less pressure to further cut interest rates was felt by the RBA.
Nerida Conisbee, Chief Economist at Realestate.com.au says “While the inflation rate has now been below the 2-3% target for many years, and obviously still is, it has been seen as some evidence that monetary policy is starting to work as it should.”
Another good sign that our economy may be heading in the right direction is the rate of unemployment – which remained mostly unchanged for the month of September. Nerida advised that although this may not be the most positive news, it could be worse and we could be heading in the wrong direction.
Buyers and our Spring Season
Thankfully, the three interest cuts brought on by the RBA back in June have encouraged keen buyers to enter the property market. Realesate.com.au reported record views for listings on their website in the months of September and October, further proving that buyers are back and the spring selling season is strong.
With the loosening of lending restrictions by the APRA, buyers are seeing the benefits and enjoying shopping around for competitive rates.With many of our experts predicting that the selling season will remain strong all the way up to Christmas, those wanting to buy are still being encouraged to take full advantage of these record low interest rates.
If you are looking to buy in the upcoming months, it’s important to shop around and look at what all lending institutions are offering. While many of the smaller institutions have graciously passed on the entire rate cut to customers, majority of the bigger backs haven’t.
“The behaviour of the banks in passing on interest rate cuts is problematic – there isn’t much point cutting the cash rate if the benefits are diluted by the time it reaches consumers and businesses,” noted Nerida.
2020 and Interest Rates
With Christmas and New Year well and truly around the corner, it’s unlikely that the RBA will make any further cuts following their next meeting in December.
Conisbee predicts rates will remain on hold at least until February, 2020. “Whether the RBA cuts rates next year, or is even forced to move to quantitative easing, it’s only one way that conditions can be pushed forward,” she says.
If we were to see another rate cut, we would be looking at new record low of 0.50%. This rate cut, combined with the tax cuts and state and federal budgets, the property market for 2020 is looking good.
ENTIRETY OF ARTICLE: Realestate.com.au