At its first board meeting for 2013, the Reserve Bank has decided to leave the official cash rate on hold.
Earlier today, the board judged that it was prudent to take a wait and see approach to rates, leaving the cash rate stable at three per cent.
Speaking about the Reserve Bank’s decision, RP Data’s national research director Tim Lawless said the RBA was “reasonable satisfied” with how the housing market has played out since it embarked on the rate cutting cycle back in November 2011.
“Since that time dwelling values across the combined capital cities of Australia have increased by 0.8 per cent, and values are up 3.1 per cent since bottoming out at the end of May last year,” he said.
“Most other indicators are also showing some subtle improvements, albeit from a low base.
“Consumer confidence has shown some improvement, commodity prices are once again on the rise, and share markets have shown some consistent gains as well.
“The big wild card remains the labour market; how high will unemployment go and at what level will the RBA react with a further cut to the cash rate.”
LJ Hooker deputy chairman, L Janusz Hooker, says mortgage holders should receive some extra relief during the coming months, even with a more buoyant housing market during January.
He predicts cuts of around 50 basis points during the first half of this year, but says it was premature to make a move in February.
"Interest rates here are at three per cent and, while at historic lows, most of the developed world has rates below one per cent, so there is plenty of room to move,’’ Mr Hooker says.
"The RBA are going to have to start making cuts sooner rather than later if they want to see results in the second half of the year.’’