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RBA keeps rates on hold

RBA keeps rates on hold

by Steven Cross 0 comments

The Reserve Bank of Australia announced that the cash rate will remain on hold at 2.5 per cent.

This decision came as no surprise, with the board previously indicating it expects a "period of stability" in interest rates.

RP Data national research director Tim Lawless said the board would be happy with the effects of current monetary policy settings on the domestic economy, with a strong property market now driving increased investment in dwelling construction.

“More housing market activity has translated to greater developer confidence and a consistent upwards trend in new building approvals,” he said.

Key housing market metrics produced by RP Data continue to indicate buyer demand remains strong across the housing market.

“Auction clearance rates have consistently been around the high 70 per cent mark since mid-February and mortgage demand, as measured by activity across the RP Data valuation platforms, was at record daily averages during February," according to Mr Lawless.

“As long as mortgage rates remain low we would expect housing market conditions to remain in positive growth territory, at least in trend terms,” he added.

Yesterdays decision means the cash rate has now remained unchanged at 2.5 per cent since August of last year.

Deputy chairman of LJ Hooker, Janusz L Hooker, said rising unemployment and concerns about the inflation is failing to dent the enthusiasm of homebuyers.

Mr Hooker was not surprised by the RBA’s move to keep rates on hold and does not expect them to lift until the end of the year.

"February has just delivered one of the best starts to the real estate year ever recorded and we have not seen any signs of it slowing down despite some murmurs about a property bubble," Mr Hooker said.

"It’s important to remember that while Sydney and Melbourne prices continue to push upwards, it is not the same story across the country with markets such as Adelaide and Hobart struggling.

"A projected period of stability for rates during 2014 will boost buyer confidence particularly in markets which have not been performing as strongly and will keep up the momentum in others."

RBA keeps rates on hold
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