The Reserve Bank of Australia (RBA) has kept the cash rate at a record low of 0.1%, for the sixth month in succession.
The news came with little fanfare, as it is not expected to change for several years, despite rumblings that the proposed schedule to raise it may be brought forwards.
Interest rates are also hitting lower levels than ever before, sparking a price war between the Big Four banks that has seen all but ANZ set a rate under 2% for the first time ever.
Non banks have gone even further, with Homestar Finance currently as low as 1.74% for a two-year fixed rate home loan.
As wage growth remain static, however, pressure grows on the RBA to move ahead of schedule to keep young people within touching distance of property ownership.
2024 is the target for the next upwards movement, but some experts think that it might come sooner, should house prices continue to spiral and wages stay the same.
“The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range,” said RBA Governor Philip Lowe. “For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest.”
John Kolenda, Managing Director at aggregator Finsure, commented: “Commonwealth Bank last month became the first of the big four to move upwards on long-term fixed mortgage rates. Fixed rates appear to have bottomed out and consumers with existing home loans should consider fixed rates as an option before they start to rise.”
“While you can secure some of the lowest ever interest rate pricing with a fixed rate. But this needs to be carefully considered. Fixed home loan rates can provide certainty to borrowers or you can take a part fixed and part variable rate to allow for some flexibility.”