The Reserve Bank has, as expected, left the cash rate unchanged at 3% today following its February monetary policy meeting.
A poll of 28 economists carried out by Bloomberg last week found that 24 of them expected the RBA to leave the cash rate unchanged today.
Preliminary figures released by ABS today revealed that capital city house prices increased by 1.6% over the December quarter, following a revised 0.1% fall over the September quarter, indicating that previous rate cuts may be starting to have an impact on the housing market.
Commenting on the decision, RP Data national research director Tim Lawless said the RBA was likely to be “reasonably satisfied with how the housing market has played out since they embarked on the rate cutting cycle back in November 2011”.
“Since that time dwelling values across the combined capital cities of Australia have increased by 0.8%, and values are up 3.1% since bottoming out at the end of May last year.
“Most other indicators are also showing some subtle improvements, albeit from a low base.
“Consumer confidence has shown some improvement, commodity prices are once again on the rise, and share markets have shown some consistent gains as well. The big wild card remains the labour market; how high will unemployment go and at what level will the RBA react with a further cut to the cash rate,” he says.
Michelle Hutchison, spokesperson for financial comparison website RateCity.com.au, said that while there was no cut from the Reserve Bank today, “it is possible that we’ll see lenders make an unprecedented move to cut their rates out-of-cycle this year”.
“Lenders have kept 40 basis points on average from variable home loans since rates began to fall and with wholesale funding reportedly lower, they have room to move,” she says.
“Borrowers need to keep a close eye on their lenders, find out what rates you’re paying and compare it to the rest of the home loan market using RateCity. The slow lending market is set to continue so borrowers are in a great position to haggle for an even better deal.”
This story was first published on Property Observer.