The Reserve Bank of Australia (RBA) has made its decision on rate movement today at the bank's monthly meeting.
Governor of the RBA Glenn Stevens announced today that the cash rate will remain unchanged at 2.5 per cent, still sitting at historical lows.
RP Data’s research director Tim Lawless said the decision comes as no surprise as the housing market is currently showing signs of improvement.
“The latest data associated with the housing market remains positive, providing an increasingly firm indication that households and developers are responding to the low interest rate environment,” Mr Lawless said.
“Dwelling values have continued along their recovery path, with home values half a per cent higher over in August and seven per cent higher since the housing market started recovering in May last year. The 0.5 per cent rise in dwelling values in August is likely to provide the RBA with some comfort after values rose by a cumulative 3.5 per cent over June and July. Importantly the rise in dwelling values has been accompanied by a substantial rise in buyer numbers as well.”
Loan Market director Mark De Martino agreed and added that the already low cash rate and the easing cost of funding issues have been a “one-two punch” of opportunity for people to save money on their home loan.
“A cash rate of 2.50 per cent has resulted in home owners having the lowest interest rates since they've likely owned their current property. Additionally, the easing cost-of-funding issues have helped banks trim off their interest rates to remain competitive,” Mr De Martino said.
In the announcement from the RBA, Mr Stevens said the bank is waiting for previous cuts to take full effect before continuing to move either up or down.
"The easing in monetary policy since late 2011 has supported interest-sensitive spending and asset values, and further effects can be expected over time, including from the declines in rates seen over recent months. The pace of borrowing has remained relatively subdued, though recently there are signs of increased demand for finance by households.
"At today's meeting, the Board judged that the setting of monetary policy remained appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the target."