Latest cash rate decision good for home buyers
May 7, 2014 / Written by Rich Harvey
People on the fence about buying property in Australia may want to jump in while low interest rates continue - a chance that's been extended for at least one more month thanks to the Reserve Bank of Australia's (RBA) most recent official cash rate decision.
RBA Governor Glenn Stevens highlighted the current state of the economy when explaining the financial institution's decision to leave the official cash rate unchanged at 2.5 per cent for the ninth consecutive month.
While economic growth and employment numbers were subdued, the housing market once again acted as a bright spot for the economy. However, sluggish activity on other sectors led the RBA to decide that stable interest rates remain the most "prudent" course of action.
"We are not surprised by the RBA's choice to leave interest rates in a holding pattern. All eyes are now on the federal budget, which could have wide implications for Australians and the future direction of interest rates," said Malcolm Gunning, president of the Real Estate Institute of New South Wales.
"While the housing market remains firm, we watch with interest the delivery of the budget, the high Australian dollar and rising unemployment levels which could negatively influence consumer confidence."
The RBA decsision was also expected by the Housing Industry Association (HIA). Geordan Murray, an HIA economist, said the decision was in keeping with recent commentary from the RBA.
More important, however, is the fact that the decision will likely mean today's low interest rates will remain available for a while longer, providing home buyers the chance to obtain affordable financing.
Whether it's first home buyers seeking a starter house or more established families looking to upgrade to luxury real estate in Sydney, the current cash rate creates the opportunity.