RBA holds rates in April after emergency double cut in March
The RBA have kept the cash rate on hold at a record low 0.25 per cent at its April meeting.
Mortgage Choice chief executive officer, Susan Mitchell said ttoday’s decision came as no surprise, given the RBA had explicitly ruled out going into negative interest rate territory in the minutes of its special meeting.
“A cash rate so close to zero is unlikely to have much impact on market rates," she said.
"Going forward, the Reserve Bank will look to monitor the impact of its unconventional monetary policy measures before resorting to cutting the cash rate again.
“While there isn’t much room for home loan interest rates to fall further, a sustained period of low interest rates will support households and businesses alike as they weather the COVID-19 induced storm. Home loan interest rates are sitting at record lows and this is particularly the case with fixed rate home loan interest rates, which are extremely competitive at present. With lenders advertising fixed rates in the low “2”s, now might be a good time to lock in a low rate,” said Ms Mitchell.
“The property market will be tested in the coming months, much like many other parts of the economy. While the latest CoreLogic Hedonic Home Value Index revealed that dwelling values continued to rise in March, up 0.7% nationally, it was the lowest monthly gain since the market turned in July last year.
“The outlook for dwelling values is uncertain and only time will tell how a contraction in economic activity will impact dwelling values but it’s fair to say that social distancing measures will likely dampen demand in the medium-term,” concluded Ms Mitchell.
CoreLogic's head of research Eliza Owen says the record-low rate may be in place for years to come.
"No doubt the RBA will be closely monitoring the impact of record low interest rates and other stimulus measures on the economy", Owen said.
"To date, the policy announcements from the RBA and other sectors of government have been well received with the overall level of stimulus now getting close to 17% of Australian GDP."
Owen says housing market activity is "clearly slowing amid high uncertainty.
"It seems as if monetary and fiscal stimulus has been coordinated so as not to add excessive demand for housing.
"Under normal conditions, such a low interest rate setting would be stimulatory for housing markets, however with confidence plunging amidst an economic slowdown, we are expecting both buyer and seller activity will fall sharply over the coming months.