RBA April 2019 Cash Rate Decision

RBA April Cash Rate Decision

RBA board has met on Tuesday the 2nd of April 2019 and decided to leave the cash rate unchanged at 1.50%. The cash rate has now been unchanged for over two years (1.75% to 1.50% on the 3rd August 2016).

Growth in Housing Market

Conditions in the Sydney and Melbourne housing markets have continued to ease and nationwide measures of rent inflation remain low. Growth in credit extended to owner-occupiers has eased, while demand by investors has slowed considerably as the dynamics of the housing market have changed, this can be supported by the January 2019 RBA credit growth report.

Credit conditions are tighter than they have been for some time, resulting in lenders with reduced risk appetite and lenders now going on record saying perhaps they were too conservative with mortgage applications, this has also occured with a weaker demand forinvestor lending. As an example of reduced risk, some lenders have ceased products including reverse mortgages. Mortgage rates remain low and there is strong competition for borrowers of high credit quality, including heavy discounting and rebates, for lenders that can qualify. You can read more about the refinancing process or the process of purchasing a new property. To read more about the different loan features when applying for a home loan.

It is yet to be seen that a rate cut would stimulate the credit and housing markets, similar to what occurred in late 2016.

Australian Economy

Locally, the Australian economy slowed to 2.3% for 2018. This has been supported by positive business conditions and increased spending on infrastructure. Household consumption has been affected by a weakness in housing markets. The unemployment rate is 4.9% – lowest in six years, with the demand for labour there has been some pickup in wage growth, with reported skill shortages.

Inflation

Inflation remains low and stable, with target inflation for 2019 to be 2% and a gradual rise in for inflation to be 2.25% by 2020. Headline inflation to remain lower due to lower petrol prices. The board made the decision that a low level of interest rates will continue to support the Australian economy and the gradual growth in inflation and have left the cash rate on hold.

To Read More at the RBA: RBA Rate Decision.

Original article published: Read here