While it surprised very few, the RBA's decision yesterday to sit tight on a 3.5% rate has the industry divided on whether it was right to do so.
The Housing Industry Association (HIA) said mounting evidence, showing a deterioration in new home builds, was a key reason why rates should come down.
"[The decision] doesn’t provide any solace to a home building industry that faces the prospect of further deterioration in activity from existing weak levels," said HIA's senior economist Andrew Harvey.
"This will mean a substantial level of underemployment within the residential building industry, and, unlike theoretical models of the economy, not all of these workers can pick up sticks and move to mining areas in Western Australia.”
Both Mortgage Choice
and Loan Market
agreed the unchanged rate gave the RBA
"ammunition up its sleeve" should the Australian economy deteriorate.
"Soft inflation figures released this month show the Reserve Bank still has room to move should our domestic economy lose balance or the situation in Europe worsen,” said Mortgage Choice
's Belinda Williamson.
Big projections aside, some are arguing the unchanged rate is good news for the beleaguered fixed rate loan.
Its popularity has nosedived recently as borrowers anticipated further cuts.
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