Cash rate decision to benefit home buyers
March 5, 2014 / Written by Rich Harvey
It appears that home buyers of all stripes will be able to take advantage of record-low interest rates for at least one more month, as the Reserve Bank of Australia (RBA) has decided to leave the official cash rate unchanged at 2.5 per cent for March.
However, unlike past announcements, the latest RBA media release on monetary policy was filled with increasingly positive economic news.
RBA Governor Glenn Stevens highlighted favourable global activity, including economic expansion in the US and growing strength for the euro. Growth in Japan and a stable Chinese financial market were also spotlighted.
"In Australia, recent information suggests slightly firmer consumer demand and foreshadows a solid expansion in housing construction," Mr Stevens continued.
"Some indicators of business conditions and confidence have shown improvement and exports are rising."
Consumers involved in Australian property investment will also be glad to know that significant growth in dwelling values was also used as an indicator of returning economic strength.
"Interest rates are very low and savers continue to look for higher returns in response to low rates on safe instruments," Mr Stevens said.
This is leading to further increases in credit growth amongst Australian households - a great sign that dwelling values will continue to rise as more consumers decide to take out the loans necessary to enter the property market.
Consumers still deciding whether or not to buy a house in Australia should keep in mind that today's low rates are not guaranteed to last forever. However, the RBA's mention of expected increases in unemployment before it reaches peak levels, as well as the fact that continued low interest rates are adding to economic growth, it's likely a safe bet that rates will remain near historic lows for quite some time.