After slashing rates in a big way over the past few months, the Reserve Bank of Australia (RBA) has taken a breather for now and decided to hold the current rate steady at 3.25%.
While the RBA decision may disappoint some prospective homebuyers, who are counting on a rate cut to make it easier to get into the property market, the move is unlikely to dampen enthusiasm among first homebuyers, according to experts.
"I'm not expecting any negative impact on the nascent recovery of the first homebuyer market as a result of the decision not to cut rates," said Louis Christopher, managing director with SQM Research.
"It will probably exclude would-be entrants who have been waiting to enter the market, but in terms of existing first homebuyer activity I don't think there's any massive impact. The buying activity has been fairly strong and I expect that to continue," he said.
The latest home sales data released by the Housing Industry Association (HIA) showed a whopping 8.3% surge in sales in January boosted by the low interest rates and First Home Owner Grant (FHOG) boost.
"Prospective homebuyers are certainly finding the current conditions quite attractive and the extra incentive of the additional FHOG is sweetening the deal," said Savanth Sebastian, economist with CommSec.
However, he noted that one area of concern is the lack of investor interest in the property market. "The slowing global economy and the sharp slide in house prices overseas have kept investors nervous about entering either the share or property markets. If employment remains strong, expect a turnaround of the lack of investor interest in the second half of 2009," he said.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan