The Reserve Bank of Australia (
RBA) has made its monthly cash rate call keeping the rate on hold at 1.5% for the 15th consecutive month since it cut rates by 25 basis points in August last year.
This result was widely predicted by all 30 experts in
finder.com.au’s monthly
RBA Cash Rate Survey. A hold call was also expected by over 95% of mortgage brokers polled by HashChing.
Stricter lending and regulatory policies have helped to alleviate some of the pressure to raise the cash rate, said
CoreLogic head of research
Tim Lawless.
“Tougher lending conditions have arguably had a similar effect as a lift in the cash rate, except the effect is more focused on slowing investment activity across the housing sector while low interest rates continue to provide a broader and much needed economic stimulus.”
High levels of household debt also lower the possibility of a rate hike as this will further decrease levels of consumption, potentially dampening the economy and creating fewer new employment opportunities, he said.
John Flavell, CEO of
Mortgage Choice, said he was not surprised that the RBA decided to leave the cash rate on hold once again. However, he expressed doubt that actual home loan interest rates will be left unchanged because of the RBA’s decision.
“We have seen so much movement in interest rates across the mortgage market in recent months and I do not expect this to change any time soon.”
Non-major bank ME conducted a survey of 2,000 mortgage holders which highlighted challenges around raising the cash rate in the next 12 months. More than half (56%) of those polled said they would have difficulty managing a cash rate increase of 1% with 43% saying they would spend less while 27% of investors said they would have to sell their property.
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