Mortgage and property industry leaders have had mixed reactions to the Reserve Bank's Melbourne Cup Day cash rate decision.
According to major real estate network, Raine & Horne, the central bank's decision to leave the cash rate on hold at 2% day was a sensible move.
“With the move by the big four banks to lift variable mortgage interest rates, slowing inflation levels and the clamour to talk down the Sydney and Melbourne property markets, a rate cut was a possibility in the minds of some economists,” Angus Raine, executive chairman of Raine & Horne said.
“However the RBA
governor doesn’t strike me as someone who spooks easily, and the RBA has taken the sensible move to check more local and international data before tweaking the monetary policy levers again.”
According to Raine, the lower Australian dollar is doing some of the RBA’s work for it, while recent business data suggests the manufacturing sector is enjoying a burst of good health.
Dawn Inanli, general manager of Raine & Horne’s financial services division, Our Broker, believes a boost in consumer confidence had also prompted the RBA to leave the official cash rate on hold.
“Consumer confidence rose 1.6% in the week ending 1 November,” she said.
“With consumer confidence on the rise – even after recent moves by the major banks on variable mortgage rate increases – the general consensus was that the cash rate would be left on hold [yesterday].”
However, 1300HomeLoan managing director John Kolenda says the RBA’s cash rate decisions are becoming redundant, particularly for mortgage holders, as lenders continue to announce out-of-cycle rate increases.
“The RBA’s decisions have rapidly become redundant in the current lending environment,” Kolenda said.
“Any future RBA cuts are likely to be negated by the actions of the banks which are adhering to APRA’s new regularity requirements that will increase the cost of providing mortgages.
“Further rate relief from the central bank may also not be passed on in full by lenders and we may see increases in rates across the board due to potentially increased funding costs and pressure on the major banks to meet the APRA requirements by mid-2016. Banks might also face additional funding costs due to the issues and economic challenges faced globally.”