Today marked two years since the Reserve Bank of Australia has moved interest rates and its record-breaking run of inactivity is not predicted to end anytime soon. The RBA earlier left the interest rate unchanged at its historic low level of 1.5 percent.
The RBA maintained the message that “further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual”.
However, there were some updates to the RBA’s statement. RBA Governor, Philip Lowe, stated that “some further tightening of lending standards by banks is possible” and said that credit growth had slowed “largely due to reduced demand by investors as the dynamics of the housing market have changed”.
With regard to home loan rates, the statement said that “some lenders have increased mortgage rates by small amounts, although the average mortgage rate paid is lower than a year ago”.
The Australian economy, for its part, remains consistent with the Reserve Bank’s forecast for GDP growth. GDP performed strongly in the March quarter.
Business conditions are still positive while business investment in non-mining sectors is also increasing. The high levels of investment in public infrastructure and growth in exports continue to support the country’s economy.
In the labour market, Governor Lowe noted a strong employment growth coupled with an increase in labour force participation. The unemployment rate of 5.5 percent has not changed in the past year. In terms of wages, growth remains low but an increase is likely over time.
As for the housing sector, house prices continue to decline although conditions in Melbourne and Sydney have eased. Following the same trend is the housing credit growth due to a slow investor demand. Lending standards are also foreseen to be further tightened with APRA implementing its supervisory measures.
The Reserve Bank has not lifted interest rates since August 2016.
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By Wendy Chamberlain
Copyright 2018 | All Rights Reserved
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With a passion for all things real estate spanning over 20 years, Wendy loves that her role as a Buyers Agent or Sellers Advocate gives her buying and selling clients an experienced voice they can trust when it comes to negotiating to buy or sell something as important as their home or investment. Wendy considers it a privilege to be asked to help others realise such an important goal as home ownership and to be trusted with that honour. Get in touch today via www.wendychamberlain.com.au for a no obligation chat about how Wendy can work with you and help you save time and money to secure your new home sooner.