RBA leaves cash rate unchanged at 3% in April

As expected, the Reserve Bank has left the cash rate unchanged at 3% following its monthly monetary policy meeting today.

All 28 economists polled by Bloomberg ahead of the Easter long weekend tipped the cash rate to remain unchanged.

This is the third straight meeting the RBA has left the benchmark interest rate unchanged and at its lowest setting since the GFC.

“The latest housing market indices from RP Data and Rismark International, which showed another rise in dwelling values across the capital cities in March, would have provided further reassurance to the Reserve Bank that the previous rate cuts are taking affect,” commented RP Data national research director Tim Lawless.

“Based on RP Data's index to the end of March, capital city dwelling values have risen by 4.7% since bottoming out in May last year, with every capital city housing market recording a rise in home values.

“Rents and investor yields are also rising, as are transaction volumes.  Pretty much every market indicator is pointing to a further recovery in the housing market; clearance rates are higher, homes are selling faster and vendors are discounting their prices by less.

“The broad based recovery in housing market conditions, together with the strong labour market data for February, high consumer confidence and an improving share market, are all factors that are likely to keep interest rates at their current setting,” says Lawless.

With no rate change in five months (December 2012), Alex Parsons, CEO of financial comparison website RateCity.com.au, said this could signal the end of the interest rate downward cycle.

“While we are still seeing some fixed home loan rates falling, their descent has slowed significantly, which could also be a sign of lenders expecting funding pressure to stabilise or lift in the near future.

“For instance, the average three-year fixed rate fell by 0.56 percentage points in the six months to October 2012, and in the past six months it fell by 0.36 percentage points, according to RateCity’s database of more than 100 lenders,” Parson said.

“Since the Reserve Bank began lowering the cash rate in November 2011, borrowers with a typical $300,000 mortgage are paying $266 less in monthly repayments.”

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer


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