In a move that is sure to bring relief to borrowers, the Reserve Bank of Australia (RBA) has left the official interest rate unchanged this month at 4.5%. June is the first month since February that a ‘hold’ decision has been passed by the RBA.
Industry experts are happy with the decision which they hope will bring a level of confidence back to the slowing market, which has been affected by a drought of first homebuyers. “We have seen first homebuyers exiting the market quite rapidly and we don’t want the rest of the market to follow,” said David Airey, president of the Real Estate Institute of Australia (REIA).
With sales slowing and listings rising across the nation, Airey believed that homebuyers have been too scared to act in light of predicted increases in mortgage rates. According to recent Housing Finance figures from the Australian Bureau of Statistics, the number of first homebuyers has decreased to 16.1%, the lowest level in five years. The long-run average is 20.1%.
The recent decision to hold interest rates could be an indication that the RBA is taking the state of the housing market into consideration when making its decisions, said Airey. “I am glad to see that the RBA has made an accurate assessment regarding the state of the housing market. Further interest rate rises would have only been more devastating news for Australian homebuyers and the strength of the housing market.”
Loan Market executive chairman Sam White said that the decision should help boost the nation’s economic morale. “The previous six quarter percentage point increases implemented by the RBA since October last year have successfully slowed down economic activity, particularly in the housing market,” said White. “I think we’re going to see a significant period of interest rate stability. A lot of the upward pressure’s now been taken out of the marketplace and I think for the foreseeable future interest rates are going to be on hold.”