RBA holds rates at June meeting, spent $50 billion in government bonds
The RBA have continued to hold rates at record lows at the June 2020 meeting.
RBA Governor Philip Lowe said the government bond markets are operating effectively and the yield on 3-year Australian Government Securities is at the target of around 25 basis points.
"Given these developments, the Bank has purchased government bonds on only one occasion since the previous Board meeting, with total purchases to date of around $50 billion," Lowe said.
Lowe added the bank is prepared to scale-up its bond purchases again and will do whatever is necessary to ensure bond markets remain functional and to achieve the yield target for 3-year AGS.
"The target will remain in place until progress is being made towards the goals for full employment and inflation."
CoreLogic's head of research Tim Lawless says the low cash rate setting is one factor helping to support housing market conditions, citing owner occupier mortgage rates averaging less than three per cent as another.
He also mentioned the reports which are emerging that banks are offering extended interest-only periods and allowing customers to pivot to interest-only repayment schedules.
"This kind of policy is likely to become more wide spread later this year, as ‘mortgage holiday’ periods end and government stimulus measures taper." Lawless said.
"Such a low cost of debt, along with improving consumer sentiment and an easing in social distancing policies were factors supporting an 18.5% rise in housing activity through May, after sales plunged by about 33% nationally in April", Lawless added.
"The low rate setting and improving level of market activity also partially explain why housing values have fallen by less than half a percent through the COVID-19 crisis to date.
"As the cash rate target is set to remain at current levels, Governor Lowe has also called for the extension of fiscal policy measures.
"With additional stimulus measures in the wings, including the potential for stamp duty reforms and cash handouts to support new home building and renovations, we could see some additional support for housing activity later this year."