Finance advice

RBA makes cash rate decision

By Sasha Karen
RBA

The Reserve Bank of Australia has announced its official cash rate for October following its monthly board meeting.

Consistent with current industry predictions, the RBA has decided to keep the official cash rate at the record low of 1.50 per cent.

The last time the cash rate moved was in August 2016, where it ticked down 25 basis points.

Of all panellists surveyed on finder.com.au, all 31 experts for October have predicted for the cash rate to hold, while HashChing’s broker survey shows 92.25 per cent of brokers also believe the cash rate will hold.

Mortgage Choice CEO John Flavell said the decision to hold stems from the consideration of domestic and global economic factors, which make it “easy to see why” the RBA put the cash rate on hold.

“On the domestic front, the economy is tracking well, with positive business conditions, improved consumer confidence and a relatively low unemployment rate,” said Mr Flavell.

“At a global level, things are also looking up. In the US, the Federal Reserve left the official cash rate on hold, citing a strengthening labour market and moderate growth in economic activity as the basis for their decision.”

Jessica Darnbrough of Mortgage Choice said the economy is currently at a healthy state, so there’s no need for the RBA to adjust rates.

“It is clear the board believes that the current plan of attack is consistent with achieving the inflation target over time,” said Ms Darnbrough.

Michael Witts of ING Direct agrees, saying “the economy is heading in the right direction and there is no need for RBA action at this stage”.

The Housing Industry Association’s Shane Garrett also thinks that the current economic climate does not need any intervention by the RBA.

Andrew Wilson of Domain said the decision to hold the cash rate is indicative of a longer-term stable view, which is reinforced a slightly falling Sydney house price growth, job levels increasing and an improving federal budget position.

However, Mr Wilson added there are still issues that show Australians are “not out of the woods yet”; “stagnant incomes growth, subdued inflation and over-inflated currency remain the jokers in the pack,” he said.

Leanne Pilkington of Laing+Simmons concurs with the notion of additional influences that could impact on the RBA’s optimism, and can see the cash rate holding into the first quarter of 2018.

CoreLogic’s head of research Tim Lawless also noted a cooling housing market will raise the cash rate in the future, looking to how the cash rate has influenced property prices.

“CoreLogic’s hedonic home value index reported the first month-on-month decline in Sydney dwelling values since March last year when the previous round of APRA regulatory changes were flowing through to credit policies and reducing investor participation,” Mr Lawless said.

“That previous slowdown in housing market growth reversed when the cash rate was cut in May and August last year and investment credit growth accelerated.

“No such lifeline is likely to eventuate this time around, and in all likelihood, we will continue to see the trend rate of growth easing across the Sydney and Melbourne housing markets.”

Despite the domestic economy improving, Mr Lawless said wage growth and inflation are “subdued”, and with the cooling housing market, these factors are likely to ease pressure on the RBA to push the cash rate higher.

John Caelli of ME Bank said he “clearly” sees that the next move, whenever it may come, will be a rise.

Nerida Conisbee of REA Group agrees with Mr Caelli’s sentiments, but does not see a rise anytime soon.

“The economy is too weak to increase rates and the housing market is too sensitive to cuts to decrease them,” Ms Conisbee said.

Economist Saul Eslake stated the RBA appears to want to keep rates at their current level, and is not “in any hurry to start raising them”.

“RBA will have drawn some comfort from data releases since the last meeting, but will see them as supporting its current set of forecasts rather than warranting upward revisions to them,” he said.

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  ["title"]=>
  string(72) "Mortgages in a tighter lending economy and why Brisbane is a good option"
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Tune in to the latest episode of Property Showcase, the podcast with the inside track on the products and businesses that will help turbocharge your portfolio, maximise returns and make your overall investment experience seamless and stress-free!

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To hear more about these services, make sure to tune in to this episode of Property Showcase!

 Make sure you never miss an episode by subscribing to us now on iTunes!

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Son Pham is the accredited Head of Mortgages at Rethink Financing\/Rethink Investing. He has over 6 years\u2019 experience writing loans, over 12 years in the wealth management industry working for the likes of CBA, AMP and private practice and he is also a licenced financial planner (AFSL 326450). He has multiple investment properties that are cash flow positive which help pay his mortgage on his home and fund his lifestyle.<\/p>\r\n

Son is able to write all types of residential and commercial property loans.<\/p>\r\n

In this episode of Property Showcase, head of mortgages at Rethink investing Son Pham joins host Tim Neary to unpack how an investor should approach getting a mortgage in place with banks tightening down on serviceability.<\/p>\r\n

Hear from\u00a0Son\u00a0about:\u00a0<\/p>\r\n

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  • The pitfalls that he has seen people get into<\/li>\r\n
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    In this episode of Property Showcase, director of investment services for Open Corp Michael Beresford,\u00a0joins\u00a0editor of Real Estate, Tim Neary to share why he disagrees that the cooling market means that the best times are behind us.<\/p>\r\n

    In this episode, hear from\u00a0Michael\u00a0about:\u00a0<\/p>\r\n

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Mortgages in a tighter lending economy and why Brisbane is a good option
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Will Magee has had ambitions to enter into the Australian property market for quite some time, but it has been more than just finances holding him back.  Having been granted permanent residency just two weeks ago, Will is wasting no time and is now in the process of signing papers and finding his first investment property.

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In this episode of the Smart Property Investment Show, Will joins host Phil Tarrant to share why he is purchasing his first property in partnership with his brother, discuss the complications that can arise from such a strategy, and unpack the ongoing plan for building a joint property portfolio with his brother.

Will will also share how they approached saving for their first property, why he is taking out the mortgage in his name exclusively, and share their savings plan for the year ahead.

If you like this episode, show your support by rating us or leaving a review on iTunes (The Smart Property Investment Show) and by following Smart Property Investment on social media: FacebookTwitter and LinkedIn.

If you have any questions about what you heard today, any topics of interest you have in mind, or if you’d like to lend your voice to the show, email [email protected] for more insights!

RELATED AREAS OF INTEREST:

From property in Australia to a ski lodge in Japan
Mortgage Trusts, an alternative first step for property investors
Should a real estate title be in one person’s name only?

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A property investment plan years in the making
object(stdClass)#1202 (52) {
  ["id"]=>
  string(5) "18287"
  ["title"]=>
  string(75) "Regional Victoria showing up Melbourne in price performance, new data finds"
  ["alias"]=>
  string(74) "regional-victoria-showing-up-melbourne-in-price-performance-new-data-finds"
  ["introtext"]=>
  string(139) "

Median house prices in regional Victoria outperformed that of Melbourne in the June quarter, the latest REIV figures reveal. 

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Median house prices in the regions rose 4.0 per cent to $419,500 but in Melbourne they dipped by 0.6 of a percentage point to $840,000.

The result in Melbourne was due to a 0.8 of a percentage point fall in prices achieved at auction; this was despite a lift of 2.3 per cent in private sales.

Inner Melbourne suffered due to auction prices, where median prices fell by 4.9 per cent to $1,459,000 but it was middle Melbourne that was hardest hit, with a 5.4 per cent drop to $974,500.

Outer Melbourne had a good quarter with the median rising by 0.5 of a percentage point to $681,000.

Apartment prices in regional Victoria grew by 3.7 per cent to $304,500 while the metro media was up by 0.5 of a percentage point to $604,000.

REIV President Richard Simpson said that despite fewer sales, many sectors of the market were performing well.

“2017 was a bumper year and while the trendline has flattened, despite the fall in median house prices in the June quarter, median prices are still up this calendar year for both houses and units, in Melbourne and in the regions,” Mr Simpson said. 

In particular there was been strong growth in regional centres which is probably due to the first-home buyers’ concessions said Mr Simpsons.

“The first-home buyers’ concession has been a boon for regional areas. A new entrant to the property market buying a house at the regional median will pay no stamp duty, while a first home buyer of an apartment in Melbourne at the median price would pay stamp duty of nearly $25,000,” he said.

Mr Simpson said that more prospective buyers are looking towards regional Victoria which is also having an effect in Melbourne.

“Melbourne’s outer perimeter continues to grow. Small increases in the June quarter mean that the median prices for both houses and units have risen over 10.5 per cent from a year ago.

Mr Simpson said moving forward that vendors need more realistic expectations as the highs of 2017 are now over.

“Negative chatter about the future of the sector coupled with stronger lending controls by financial institutions has created some uncertainty and vendors need to be realistic with their price expectations,” Mr Simpson said.

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Regional Victoria showing up Melbourne in price performance, new data finds

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