July RBA decision: Interest Rates At Historic Low
by Dinah Lewis Boucher | Reserve Bank Of Australia
As anticipated by market analysts, the Reserve Bank of Australia (RBA) has cut the official cash rate for a second month in a row, bringing it to just 1% p.a. A new historic low!
Capital Economics thinks the bank will again cut interest rates by 0.5 per cent by early next year.
RBA Governor Philip Lowe reported that the central bank’s focus is on the nation’s economy and rising unemployment. “Today’s decision to lower the cash rate will help make further inroads into the spare capacity in the economy,” Lowe said.
What does this mean for the Property Market?
CoreLogic research analysts report that”the ongoing slowing of the rate of decline in dwelling values throughout 2019 and the recent uptick in Sydney and Melbourne values, would likely have reduced concerns of further wealth erosion from housing.”
Over the year to the March quarter, the nation’s economy grew by 1.8 per cent and Real Estate Institute of Australia president Adrian Kelly describes the second cut as “a major boost to housing affordability”.
“Subject to the banks passing on the cuts in full, this means that for each $100k borrowed annual payments decrease by $500,” Kelly said.
The Reserve Bank’s back-to-back record cuts, combined with APRA’s recent moves on mortgage lending, are factors Kusher describes as “likely to to be further positives for the housing market” likely to encourage a “gradual levelling in the housing downturn nationally”.
National housing market data released this week reveals a 0.2 per cent fall in June, with Corelogic describing this as the smallest month-on-month decline since March last year.
