The Reserve Bank of Australia (RBA) has kept the interest rates steady at its record low of two percent. The decision was made in today’s meeting of the bank on monetary policy. This is the third straight month that the rate was maintained at its lowest.
RBA Governor Glenn Stevens said that “while the rate of growth has been somewhat below longer-term averages, it has been associated with somewhat stronger growth of employment and a steady rate of unemployment over the past year.” He also noted that the reserve is expected to start increasing its policy rate later this year.
A survey done earlier by Bloomberg had 25 out of 28 economists predicting the move to hold the interest rate at its current level.
Meanwhile, the Australian dollar rose by half a cent from 72.9 US cents to 73.4 US cents just before the RBA decision to maintain the two percent interest rate. RBA Governor Glenn Stevens said the jump in Australian dollar was a reaction to the drop in key commodity prices.
In the same meeting, Stevens said that credit is recording moderate growth while growth in lending to the housing market has been steady these recent months. House prices are on the rise notably in Sydney but trends in other capital cities have been more varied. The RBA head added the bank is now working with other regulators to contain the risks from the housing market.
On the other hand, mortgage comparison website RateCity revealed that interest rates on some 184 loan products went up in July with the fixed rates trending higher. The increase was the first time in nearly five years since November 2010 when the RBA lifted the cash rate. The biggest increase was in the longer-term fixed home loan rates which noted a 0.02 percentage points rise on average in July and 0.3 percentage points in the five-year period.
Financial markets, however, are foreseeing another cut by end of the year. This should be reason enough for borrowers to rejoice.
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By Wendy Chamberlain
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With a passion for all things real estate spanning 18 years, Wendy loves that her role as a
