October 07, 2014
Sluggish consumer confidence and subdued property price growth has encouraged the Reserve Bank of Australia to leave the official cash rate on hold.
At its Board meeting earlier today, the Board judged that it was prudent to leave the official cash rate on hold at 2.5 per cent for the 14th consecutive month.
“According to the Westpac Melbourne Institute of Consumer Sentiment, confidence fell by 4.6 per cent in September,” Mortgage Choice spokesperson Jessica Darnbrough said.
“This sudden and disappointing drop in confidence has ultimately forced the Reserve Bank of Australia to leave the official cash rate on hold at today's Board meeting.
“While the Reserve Bank has made it clear in recent weeks that something needs to be done to cool the property market, it is now unlikely that the Board will raise the cash rate anytime soon as this may further negatively impact consumer sentiment.”
Ms Darnbrough said the fact that dwelling value growth was virtually flat over the month of September would have given the Reserve Bank further reason to leave the official cash alone this month.
“Research conducted by RP data shows housing values eased their way into spring, with the combined capital cities recording dwelling value growth of just 0.1 per cent,” she said.
“Despite the sluggish growth this month, dwelling values are now 9.3 per cent higher over the 12 months to the end of September, with every capital city recording an increase in dwelling values over this time.
“Further, other housing indicators remain relatively strong, with auction clearance rates continuing to beat the 70 per cent mark week after week.”
Moving forward, Ms Darnbrough said this positive housing data combined with the sluggish consumer sentiment will encourage the Reserve Bank to continue to leave rates on hold.
“New data suggests the Australian economy is performing strongly – the property market continues to perform well and the Australian dollar has fallen significantly since the start of September, which will help to support Australia's rebalancing act,” she said.
“So, with rates still on hold and set to stay this way for the short term, now is a great time for those with a mortgage to review their home loan and make sure they are still in the most suitable product for their needs.
“Similarly, if you would like to get onto the property ladder, now is a good time to do so.”
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