Reserve Bank of Australia holds cash rate steady

The-cash-rate-is-resting-at-a-cool-25-per-cent-which-is-great-for-homeowners-and-buyers_157_68876_0_14047177_300Sydney homeowners will be relieved by the latest announcement from the Reserve Bank of Australia (RBA) relating to the official cash rate (OCR).

The board of the RBA announced on May 6 that the OCR would not change and instead remain at a low 2.5 per cent.

Such a figure is promising for those with home mortgages, while it may also spur investors and would-be buyers to make the most of the affordable mortgage products offered by lenders in the New South Wales capital.

Stability predicted

RBA Governor Glenn Stevens noted that interest rates will remain at stable levels for some time in a May 6 statement.

There were several reasons behind the board’s decision to keep the cash rate at 2.5 per cent, including the decline in resources sector spending and a rising unemployment rate.

“Recent information suggests moderate growth is occurring in consumer demand and foreshadows a strong expansion in housing construction,” Mr Stevens explained.

“Some indicators of business conditions and confidence have improved from a year ago and exports are rising. But at the same time, resources sector investment spending is set to decline significantly and, at this stage, signs of improvement in investment intentions in other sectors are only tentative”, Mr Stevens continued.

Despite some concern with the resources sector, a pick-up in housing constructing is certainly promising, particularly for those looking to expand their real estate portfolio or upgrade from their existing property in the future.

Good outcome for homeowners

The RBA’s announcement puts existing homeowners in a good position, given that the OCR directly affects lenders’ interest rates.

Those on variable loans will watch the RBA’s decisions in coming months closely, as any change in the OCR could ultimately alter their mortgage repayment amounts.

Sydney properties have show consistent growth, with dwelling values increasing 4.1 per cent quarter-on-quarter to March, according to the latest RP Data-Rismark April Hedonic Home Value Index Results.

Leave a Reply

Your email address will not be published. Required fields are marked *