RBA hold rates at May meeting

AMP Capital chief economist Shane Oliver is one who believes a rate change will come before 2024.

RBA hold rates at May meeting
RBA hold rates at May meeting

The RBA maintained its current policy settings at its May meeting, keeping the official cash rate at a record low 0.1 per cent.

RBA governor Philip Lowe said housing markets have strengthened further, with prices rising in all major markets.

"Housing credit growth has picked up, with strong demand from owner-occupiers, especially first-home buyers," Mr Lowe said.

"Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained."

The RBA stood by their view that rates won't likely change until 2024. Around 65 per cent of experts surveyed in Finder's monthly RBA Cash Rate Survey believe there won't be any rate change until 2023.

AMP Capital chief economist Shane Oliver is one who believes a rate change will come before 2024.

"While the economy is recovering faster than expected, the RBA is still a long way away from seeing its stated requirements for a rate hike – being a tight jobs market, wages growth well above 3% and actual inflation sustainably within the 2-3% target range," Oliver said.

"A rate hike is still a fair way off although I think it will come before the RBA’s expectation for ‘2024 at the earliest’.”

The clear message from the RBA however hasn't stopped banks changing their fixed rates, with Westpac, including their subsidiary banks including St George, Bank of Melbourne and BankSA, lifting their four-year fixed from 1.89 per cent to 2.19 per cent. They also raised their five-year fixed to 2.49 per cent.

The four-year rise copied the move by CBA in March, however CBA reduced its one and two-year fixed rates at the same time.

UHomeLoan also raised their three-year fixed by 10 basis points to 1.85 per cent.

“This sudden wave of lenders increasing longer-term rates and decreasing shorter-term rates reveals a strategy to lock their customers in for shorter time periods," Graham Cooke, insights manager at Finder said.

“This can be seen as a bet on variable rates increasing sooner than expected. It also reveals that the tide could be turning on our historically low fixed home loan rate environment."

Joel Robinson

Joel Robinson

Joel Robinson is a property journalist based in Sydney. Joel has been writing about the residential real estate market for the last five years, specializing in market trends and new developments across the country

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