Australian Property News

Rates stay on hold – for now

Posted on Tuesday, February 05 2013 at 1:51 PM

The official cash rate remains unchanged at three per cent following a meeting of the Reserve Bank of Australia (RBA) today.

Contained inflation, more optimistic economic news out of the United States, Europe and China and a more robust housing market here at home are likely to have contributed to the RBA Board’s decision.

The majority of economists had tipped today’s decision but remain confident of further interest rate reductions throughout the rest of the year.

Some commentators are predicting total cuts of up to 100 basis points in 2013.

Loan Market corporate spokesman Paul Smith says despite today’s decision, some lenders may toy with the idea of making their own movements.

“With the cost of funds pressure easing for many lenders, there’s an opportunity for them to make adjustments to their variable rates in attempts to attract new customers,” Smith says.

“The action or inaction from lenders in the following weeks could be indicative of what’s in store for interest rate movements over the next several months.”

Raine and Horne chief executive officer Angus Raine says the RBA’s year-long focus on whipping up consumer sentiment might be starting to bear fruit.

“Already (this year) there’s evidence that buyer demand is collecting speed as the two rate cuts in October and December continue to flow through,” Raine says.

“At the same time, our offices are reporting a shortage of homes for sale, which should help push up prices by as much as seven per cent in some markets in 2013.”