Interest rates to stay at record low: RBA

The Reserve Bank of Australia has announced the official cash rate will remain at a record-low 2.5 per cent for the 11th consecutive month, as forecast by experts.

All 18 economists surveyed by comparison website had forecast that rates would remain on hold.

RP Data research director Tim Lawless said the Reserve Bank’s decision had been influenced by conditions in the Australian property market.

“RP Data recently reported that dwelling values were down 0.2 per cent over the June quarter, dragged down by a very weak May result and a partial recovery of values in June,” he said. 

“Policymakers, including the Reserve Bank, are likely to be reassured by the slowdown in housing market conditions, where the rate of growth earlier in the year was increasingly viewed as unsustainable.”

REINSW President Malcolm Gunning said the decision to keep interest rates at historically low levels is creating opportunities for those seeking to purchase both residential and commercial property.

"It is a terrific opportunity for home owners and investors to buy residential property. Changes to lending criteria also mean it is a good time for business owners to purchase their own premises," he said. 

"Unlike residential property, commercial properties generally haven’t increased in price in the last five or six years. Combined with the relaxed lending conditions for commercial loans it is a great time for businesses to take the next step," he added.

LJ Hooker’s chief executive officer, Grant Harrod, said the start of a new financial year combined with the traditionally quieter winter market, always made changes to the rate unlikely.

“The continued stability of rates will give buyers extra confidence, even with speculation an increase will eventually come,’’ he said.

 “We have seen property price growth soften as the market heads into winter, but even still, demand is strong as seen in the volume of sales and auction clearance rates around Australia’s various markets.’’

Meanwhile, ANZ chief economist Warren Hogan told the survey that the economy had been playing out as expected for the Reserve Bank.

“We're seeing non-mining activity continue to improve and we're seeing job creation, so essentially monetary policy is set to remain on hold for an extended period of time,” he said.

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