RBA August Announcement
Written by Rhiannon Coussens
From the last announcement in July there was speculation that the interest rate might drop for a third month. However, as of yesterday’s announcement, the Reserve Bank of Australia (RBA) has decided for the official cash rate to remain on hold at the record low cash rate of 1%.
Governor Lowe’s recent guidance was to expect “extended period of low interest rates will be required in Australia”.
What does this mean for the Property Market?
For now the RBA is in “wait and see” mode to work out what boost to growth the rate cuts from June and July provide.
CoreLogic head of research Tim Lawless said the housing market had been a key beneficiary of lower mortgage rates, with prices stabilising over the year before a “subtle rise” last month. “The improvement in housing market trends can’t be attributed entirely to lower interest rates, there has also been the added stimulus of looser home loan serviceability assessments, following APRA’s decision to scrap the minimum 7 per cent interest rate floor used to assess borrower’s ability to repay a mortgage, as well as the confidence injection post federal election and tax cuts for low income earners”.
There is still an expectancy of the interest rates dropping before the end of the year but at this stage the RBA are monitoring inflation, house prices, wages growth, household consumption and concerns around unemployment level before making its next decision.
