C&G's Guide to the May RBA Announcement

Real Estate News, Tips & Advice

For the 19th consecutive month, the Reserve Bank of Australia has held the official cash rate at 1.5%. In today’s blog, C&G explain what May’s announcement means for the property market and the wider economy. 

As widely predicted by economists, Governor Philip Lowe announced on Tuesday that the national cash rate would remain on hold at its all-time low rate of 1.5%. In his statement, Dr Lowe explained that low interest rates continued to support the needs of the Australian economy, and that the gradual move towards restored inflation paired with a reduction in unemployment rates is movement in the right direction. Employment rates continue to trend towards growth, but have begun to decrease slightly in recent weeks. The Board is seemingly waiting for evidence of wage growth before raising rates – the margin required to assist borrowers pay for more expensive loans.

For property investors, it’s good news from APRA with the removal of the 10% annual cap on investor housing credit growth for some lenders. Exempt lenders will be looking to pass back savings on the higher rates imposed on investors in recent months. According to Canstar, the biggest interest rate cuts over the last month have been in the investment lending arena on both fixed and variable loans, while for owner occupiers, it was fixed loan rates that were being lowered. 

Concerning the national real estate market, housing prices in capital cities have softened for the sixth consecutive month in response to the peak buying and selling season drawing to a close and an oversupply of stock in some areas. As more interest-only loans transition to principal and interest, household debt will continue at an all-time high which will test the housing market’s resilience.

Happily, Melbourne’s Bayside community continues to enjoy outstanding real estate results. If you’re considering buying or selling property this month, team Chisholm & Gamon are on hand to discuss your property goals. With just two months to go ‘til the end of the financial year, now is the time to make important decisions.