The Reserve Bank of Australia (RBA) is expected to hold tight on the record-low cash rate through 2021, which could further boost the property market and the economy, said a market expert.
In a bid to boost the economy amid the COVID-19 pandemic, the central bank slashed the cash rate twice since the onset of the outbreak in March, bringing it to 0.1%. In its latest monetary decision this month, the central bank decided to hold the cash rate.
John Kolenda, managing director at Finsure, said the RBA could take some "long service leave" over the coming year as positive signs indicating a recovery from the COVID-19 recession start to emerge.
"I expect rates to be left on hold for some time and we may even see a similar situation to a few years ago when the RBA left rates on hold between September, 2016, and June, 2019, when it lowered the cash rate from 1.5% to 1.25%.”
Kolenda said activity in the property market will continue to increase due to the low-rate environment.
"I expect the property market will be a strong feature of the national economy over the coming 12 months with strong results being recorded around the country," he said.
He added: "Consumers are also taking advantage of the low home loan rates on offer and refinancing in big numbers with fixed rates now under 2.0% and lenders competing fiercely for business."