Interest rates on hold in November

Article written by Aline Tanner and published on realestate.com.au on 07 NOV 2017

The Reserve Bank of Australia has today decided to keep interest rates on hold, with the official cash rate remaining at 1.5%.

The decision to leave rates untouched in November probably doesn’t come as a huge surprise for most.

Despite the economy remaining a little weak, REA Chief Economist, Nerida Conisbee, believes a rate increase is on the cards – but not in the near future.

“Unemployment has come back a bit and businesses are pretty confident. The problem is that wage growth remains sluggish, energy prices are going up and debt levels are high,” Conisbee says.

“None of these factors provide prime conditions for consumers to start spending again. An increase is likely at some stage but it isn’t going to happen soon,” she adds.

RBA’s seven-year itch

Its now been seven years since the Reserve Bank lifted the official cash rate.

“It’s incredible to think there is now a large number of first home buyers who’ve never experienced a rate hike. Seven years is a long time between increases,” says RateCity money editor Sally Tindall.

RBA’s last move on rates was back in August 2016 when rates were cut by 25 basis points.

There was a big jump in buyer demand on realestate.com.au/buy following the last two rate cuts, according to Conisbee.

“With today’s decision by RBA to keep interest rates on hold, home loans will continue to become more expensive and getting home loans more difficult. This is partly because of restrictions to lending the banks are under, but also, the cost of wholesale funding for the banks continue to rise as well,” she says.

For now home owners can rest easy in the knowledge that their mortgage repayments won’t be increasing anytime soon.

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