Interest rates on hold
2015-04-21
Investors and homeowners can continue to enjoy historically low interest rates, with the Reserve Bank of Australia (RBA) keeping rates on hold again.
The Real Estate Institute of New South Wales president Malcolm Gunning says the RBA made the correct decision to keep the cash rate at 2.5 per cent.
“We’re heading into the spring auction season, which has been boosted by the RBA’s decision to keep rates on hold,” he says. “September, with its warmer weather and good lead-in time to exchange before Christmas, is traditionally the most popular time of the year to secure a property.”
The official cash rate has now fallen 225 basis points since November 2011, with the RBA cutting interest rates twice in 2013 in May and August.
“We must once again caution those seeking to take out a mortgage to ensure they they’re realistic with their abilities to service debt,” Gunning warns. “Interest rates won’t remain at these record lows and future interest rate increases must be factored in.”
RP Data research director Tim Lawless adds there’s been a 4.2 per cent rise in dwelling values across the combined capitals over the three months of winter, indicating that growth rates across the housing market have seen a rebound.
“While the rate of capital gains has been demonstrably high, growth in dwelling values has been very much concentrated within the Sydney and Melbourne markets, with every other city recording a much more sustainable pace of growth,” he says. “If higher home values were accompanied by a relaxation in lending standards that would definitely be cause for concern, however recent APRA data showed that the banking sector has reduced their proportion of high loan to value ratio lending over the June quarter. In fact, the banking sector is controlling the mortgage loan at a sustainable pace.”
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