The central bank has left the cash rate on hold at 1.5% in March. CommSec expects the RBA will likely stay on the interest rate sidelines throughout 2017.
THE Reserve Bank has left the official cash rate on hold at 1.5 per cent for the sixth meeting in a row.
The RBA was widely expected to keep rates steady at its March meeting after the national accounts released last week showed a marked turnaround in economic growth.
Reserve Bank governor Philip Lowe last month spoke three times about keeping rates on hold to balance the need to boost inflation while maintaining financial stability amid record household debt.
Real Estate Institute of NSW President John Cunningham said the RBA was taking “a wait-and-see approach”.
“All eyes are on international interest rate movements and it is unlikely that the RBA will act until at least May,” he said.
“It is time for those who are purchasing property and existing mortgage holders to carefully review their financial position as future interest rate rises should be factored into their commitment.”
Laing+Simmons managing director Leanne Pilkington said that with interest rates likely to be at their lowest point in the cycle, the time was ripe to help young Australians break into the market, called on the NSW Government to follow Victoria’s lead by abolishing stamp duty for first home buyers.
Today’s rates announcement is likely to be followed by out-of-cycle interest rate rises by mortgage lenders, according to a survey of 38 economists by comparison site Finder.
The website’s insights manager Graham Cooke said first-home buyers should practice their due diligence.
“With banks likely to lift mortgage rates out of cycle, the onus is on first-home buyers to factor in potential rate rises to their budgets,” he said.
“Generally, mortgage holders should account for two to three per cent on top of their current repayments to avoid rate shock.”
Mortgage Choice chief executive officer John Flavell said he wouldn’t be surprised to see more lenders move their rates out of cycle.
“Anyone who hasn’t reviewed their mortgage in more than 12 months, should take the time to speak to their local broker and make sure they are still in the right product for their needs,” Mr Flavell said.
The RBA cut rates twice last year, first in May to 1.75 per cent and then in August to its current historic low.
The last time the official cash rate increased was November 2010. Some economists have forecast a rate rise by the end of this year, but most expect the cash rate to remain steady, while a handful say the RBA could trim it further.
Inflation remains below the Reserve Bank’s 2-3 per cent target band, while the jobless rate has been stuck around 5.75 per cent since early last year.
While household consumption buoyed the December quarter growth result, this was the result of savings being spent with wages growth extremely weak.
— With AAP