Third time's a charm: Rates on hold once again

Font size :
Mortgage holders across the country breathed a collective sigh of relief on Tuesday, as the Reserve Bank kept interest rates steady for the third straight month. The decision not to raise rates was widely expected – but just how long can borrowers breath easy before the next hike is delivered?
The official cash rate now remains unchanged at 4.5%. Provided that the banks play ball, this means that the average mortgage interest rate will stay stable at around 7-7.5%.
Between October 2009 and May this year, the RBA delivered six consecutive 0.25% rate increases, pushing the cash rate up from 3%. But Glenn Stevens, Governor for Monetary Policy Decision, and the RBA board abruptly ceased that course of action in June, with Stevens pointing to the shaky status of the global economy as one of the key drivers.
“With growth likely to be close to trend, inflation close to target and the global outlook remaining somewhat uncertain, the Board judged this setting of monetary policy to be appropriate,” he said in a media statement following the August rate decision.
But where to from here? Are rates expected to rise again before the end of the year, or can borrowers look forward to a steady, hike-free journey towards Christmas?
Tuesday’s decision follows weaker-than-expected quarterly inflation data, which was released at the end of July. It revealed that the consumer price index (CPI), a broad gauge of inflation in the economy, increased by just 0.6% in the June quarter, almost half of the 1% increase that was predicted.
Following this release a number of economists began scaling back their forecasts of rate movements to come. Previously, at least one or two more 0.25% rate rises were anticipated before years end. Now, many economists are speculating that we won’t see another interest rate increase until November – or possibly until 2011.
The RBA’s decision will be largely influenced by inflation data, and Australia’s strong labour market (the current unemployment rate is just 5.1%) may drive inflation up in the next few months.
If this happens, “it would leave the door open for another upward nudge to interest rates before the close of the year,” says Matthew Circosta, an economist at Moody’s Analytics.
If not, then mortgage holders rejoice: we may just be gifted a further six months of stable interest rates yet.

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Mortgage News and Articles

How to tell when a housing market is cooling How to tell when a housing market is cooling

You need to check clearance rates, listings, and the price gap, among other factors Read more

Growing demand for green apartments in Sydney Growing demand for green apartments in Sydney Both owner-occupiers and investors favour eco-friendly buildings for their energy-saving features and reduced environmental footprint ... Read more

Are property investors as rich as they appear? Are property investors as rich as they appear? A multi-property portfolio doesn’t guarantee easy millions ... Read more

Be proactive about getting a better mortgage deal Be proactive about getting a better mortgage deal Apathy could be costing you a considerable amount of money over the lifespan of your loan ... Read more

More mortgage news and articles

Sponsored Links

Friday, Sep 22, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
  • How much do you want to borrow?
  • How much deposit do you have?
  • How much is your house worth?
  • How much do you still owe on your mortgage?
  • What type of mortgage do you have?

  • How much is your new home?
  • How much do you want to borrow?
  • How soon do you want a mortgage?
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords