Earlier this afternoon the Reserve Bank of Australia (RBA) board decided to leave the cash rate on hold, at 1.75%.
The RBA noted in their press release that “inflation has been quiet low” & ” this is expected to remain the case for some time” hinting that if economic conditions deteriorate there is room for the RBA to cut the cash rate again. The RBA statement also noted that a higher exchange rate could also complicate the Australian economy rebalancing process.
In relation to housing, RBA said in their statement “indications are that the effects of supervisory measures have strengthened lending standards in the housing market. Separately, a number of lenders are also taking a more cautious attitude to lending in certain segments. Dwelling prices have risen again in many parts of the country over recent months. But considerable supply of apartments is scheduled to come on stream over the next couple of years, particularly in the eastern capital cities”.
Co-founder of First Home Buyers Australia (FHBA) Taj Singh said “record low interest rates are a great concern for those in the deposit savings phase. Record low interest rates helps people repay home loans, but not those trying to save a deposit. More needs to be done to support hard saving deposit savers across Australia, regardless of who wins the election”.
Fellow FHBA co-founder Daniel Cohen echoed Taj’s comments. “We saw this morning a report which suggests the RBA is partly to blame for record low first home buyer activity. If interest rates are expected to remain low, new measures are needed to support Australians trying to put a deposit together. Otherwise the Great Australian Dream of home ownership will feel further & further out of reach for to many”.
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