Brokerage groups across Australia have opted to put a positive spin on yesterday’s RBA decision to maintain the official cash rate at 2.5%.
Franchise group Mortgage Choice says a recent raft of positive economic data, including rising consumer sentiment, improving business confidence and climbing property values were behind the decision.
“The combination of historically low rates and competitive offerings from Australia’s lenders is extremely appealing for anyone considering purchasing property in the near future,” says Mortgage Choice spokesperson, Jessica Darnbrough.
“On the flipside, for those that already have a mortgage, low interest rates provide mortgage holders with the perfect opportunity to repay their home loan faster and achieve their next financial goal sooner.”
Loan Market director, Mark De Martino, is less enthusiastic about the decision, saying the RBA has been doing a good job of keeping the economy in check - but that some economic indicators were pointing in opposite directions.
“With the encouragement of record low interest rates and excellent buying conditions, property markets throughout the country have been running hot this spring,” says De Martino.
He says record low interest rates are helping home owners and buyers save money, but that the stability of the RBA cash rate has been equally encouraging, because it’s allowing homeowners to budget more effectively.
However, he also believes the current ‘two-speed economy’ will weigh on the RBA’s decision to move rates downwards again as it waits on other sectors of the economy to pick up after the mining investment boom.
“If retail and construction don’t step up to the plate, we could see another rate drop as early as November and perhaps again in early next year, which is great news for homeowners.”
However, one group who is unhappy with the RBA’s decision is the Housing Industry Association (HIA), who say the move has simply ‘delayed the inevitable’.
"Today's decision has delayed the inevitable, with another rate cut clearly warranted based on latest economic indicators," says HIA senior economist, Shane Garrett.
"If we take a bird's eye view of the situation, we see growing downside risks to economic growth alongside flagging inflationary pressures. The Aussie dollar's strength continues to punish key sectors of the economy. All the while, new home building remains below levels of a decade ago despite record population growth…In these circumstances, another rate reduction today would have been helpful.”