philip lowe rba
RBA Governor, Philip Lowe. Source: RBA website.
  • The cash rate has remained unmoved at 3.60%
  • This sees RBA's run of ten consecutive rises come to an end
  • Property prices predicted to continue stabalising

At its meeting today, the Reserve Bank of Australia (RBA) chose to leave the cash rate target unmoved at 3.60%, making this the first month since April last year that the cash rate has remained unchanged.

RBA Governor Philip Lowe said in a statement that the decision to hold was made to provide additional time to assess the impact of the increase in interest rates to date.

“The Board recognises that monetary policy operates with a lag and that the full effect of this substantial increase in interest rates is yet to be felt,” he said.

Knight Frank Chief Economist Ben Burston commented on the rate pause, saying it will be taken as an indication that the peak of the hiking cycle is now within reach and may turn out to be 3.6%.

“The decision to pause will help bring greater clarity to the fundamentals underpinning property values and instil more confidence in the medium-term outlook.”

“For property investors, this means that the macro context now looks more reassuring as we look ahead, with the likelihood that rates will remain stable over the next few months as the RBA assesses the impact of the rate increases to date.”

Burston says rates will potentially be cut in 2024-25 if the economy slows as expected.

Prices to continue stabilising

PropTrack Senior Economist Eleanor Creagh says easing uncertainty will likely see home prices stabilise.

“The substantial tightening that has been pushed through to date saw conditions in the housing market rebalance quickly last year.”

She says the rise in interest rates has been offset by several factors, including a strong rebound in immigration and tight rental markets. These factors, combined with limited housing stock on the market, have helped to support home prices.

“Now the Reserve Bank has paused its tightening cycle, home prices will likely continue to stabilise as some of the uncertainty buyers have experienced with respect to borrowing capacities and mortgage servicing costs reduces,” Ms Creagh says.

“If stock levels remain constrained, the bounce is likely to continue to firm.”

Buyers back in business

Homebuyers are expected to become more active over winter following the Reserve Bank of Australia’s decision to hold interest rates, according to the LJ Hooker Group.

LJ Hooker Group’s Head of Research, Mathew Tiller, said buyers will be more confident to take action after the fastest and largest cycle of rate increases on record has come to an end after 10 successive monthly increases.

Interest rate increases from the end of last year are now flowing through the economy impacting household spending and causing inflation to begin to soften.

“From a property perspective, the hold will give buyers a bit of a nudge to start looking knowing we may have now passed the bottom of the market,” Mr Tiller said.

“They will be able to go to the banks and set a longer-term budget with the realisation that interest rates are not likely to change and that now is the time to go and buy property.

“Those coming off cheaper fixed rates who have been concerned about their ability to make mortgage repayments will be able to refinance with the possibility of securing a better deal from the banks.”

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