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The Reserve Bank of Australia (RBA) has announced the outcome of its second-last monthly board meeting of the year.
The central bank has decided to leave the official cash rate on hold at 2.5 per cent – where it has remained since rates dropped by 25 basis points on 7 August 2013.
Melbourne Cup day was previously synonymous with cash rate movements, with the RBA board making changes in 2007 (increased 25 basis points to 5.00 per cent), 2008 (decreased 75 basis points to 5.25 per cent), 2009 (increased 25 basis points to 3.75 per cent), 2010 (increased 25 basis points to 4.75 per cent) and 2011 (decreased 25 basis points to 4.5 per cent).
On Melbourne Cup day in 2012 and 2013, rates remained on hold.
National real estate network, LJ Hooker said the decision to keep interest rates on hold will encourage sellers who are thinking of listing their property, to act sooner.
The company’s CEO Grant Harrod said end-of-year sales would be buoyed by today’s announcement as vendors would still have enough time to list before the traditional Christmas market slowdown.
Ongoing speculation that rates are likely to move upwards in 2015 will also be weighing on the minds of buyers and sellers, he said.
The RBA’s decision to leave the cash rate at 2.5 per cent won’t surprise many, with all 33 of the experts and economists surveyed for finder.com.au’s monthly survey predicting rates would remain steady.
Westpac’s Bill Evans said the RBA’s period of stability looks set to continue.
“Since mid-March, Westpac has expected that the next move will not be until August next year. Market pricing is pointing to steady rates (around 50 per cent probability of a cut next year) through both 2015 and 2016,” he said.
“We remain comfortable with our view that the policy tightening will begin around August next year while recognising that to date the pick-up in momentum in the Australian economy has only been apparent in the housing market.”