The official cash rate has been left on hold but opinions are divided as to whether it will stay this way in 2017.
The Reserve Bank of Australia (RBA) yesterday held the official cash rate at 1.5% in a move that was widely predicted by economic experts across the country.
It marks the sixth consecutive month that the cash rate has remained unaltered and Mortgage Choice chief executive officer John Flavell said it was “safe and unsurprising”.
“Amidst a lot of domestic and global uncertainty, it wasn’t surprising to see the Reserve Bank of Australia take the safe option and leave the official cash rate on hold,” he said.
But Flavell said future rate adjustments cannot be ruled out.
“Nobody knows what the future will bring. Depending on what happens both here and abroad, the Reserve Bank could really decide to do anything with the cash rate.
“While the future is uncertain, one thing is clear: rates are currently sitting at near-historical lows, which is great news for existing property owners and potential property buyers.”
A recent HashChing survey across its broker network revealed that although 85.94% of brokers believed the cash rate would stay on hold in February, 65.45% expect a rise in 2017.
The survey also showed 72.73% of brokers said they haven’t seen any impact on the home loan market by global factors, including the current political upheaval in the US.
However, HIA chief economist, Dr Harley Dale said they are sticking to their long-time forecast of no further reductions to the OCR this year.
“Today’s Statement, following the decision to keep the OCR steady at 1.50 per cent in February, signals that economic conditions would need to deteriorate markedly from where they currently sit if there were to be a further interest rate cut,” he said.
“The RBA appears slightly more bullish on the world economy and a little more sanguine regarding the risks to the domestic economy.
“Notably, the RBA recognises the wide diversity in housing market conditions around the country. The RBA is relying on supervisory measures (i.e. APRA) to constrain any areas of the home lending market where they might have concern,” said Dale. “That is an appropriate approach in the current diverse housing environment and hopefully should dampen presumptuous calls from some quarters for a rate hike in 2017.”
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It marks the sixth consecutive month that the cash rate has remained unaltered and Mortgage Choice chief executive officer John Flavell said it was “safe and unsurprising”.
“Amidst a lot of domestic and global uncertainty, it wasn’t surprising to see the Reserve Bank of Australia take the safe option and leave the official cash rate on hold,” he said.
But Flavell said future rate adjustments cannot be ruled out.
“Nobody knows what the future will bring. Depending on what happens both here and abroad, the Reserve Bank could really decide to do anything with the cash rate.
“While the future is uncertain, one thing is clear: rates are currently sitting at near-historical lows, which is great news for existing property owners and potential property buyers.”
A recent HashChing survey across its broker network revealed that although 85.94% of brokers believed the cash rate would stay on hold in February, 65.45% expect a rise in 2017.
The survey also showed 72.73% of brokers said they haven’t seen any impact on the home loan market by global factors, including the current political upheaval in the US.
However, HIA chief economist, Dr Harley Dale said they are sticking to their long-time forecast of no further reductions to the OCR this year.
“Today’s Statement, following the decision to keep the OCR steady at 1.50 per cent in February, signals that economic conditions would need to deteriorate markedly from where they currently sit if there were to be a further interest rate cut,” he said.
“The RBA appears slightly more bullish on the world economy and a little more sanguine regarding the risks to the domestic economy.
“Notably, the RBA recognises the wide diversity in housing market conditions around the country. The RBA is relying on supervisory measures (i.e. APRA) to constrain any areas of the home lending market where they might have concern,” said Dale. “That is an appropriate approach in the current diverse housing environment and hopefully should dampen presumptuous calls from some quarters for a rate hike in 2017.”
Brokers on Banks: have your sayMPA's Brokers on Banks survey is open now and needs your help! For 14 years this survey has enabled you to score all of the banks on their performance, and give your views on key issues such as ASIC, channel conflict and commission. Take 5 minutes now to keep the banks honest, with the chance to win a pair of Bose QuietComfort® 25 Acoustic Noise Cancelling® headphones (RRP $399).
Closes 17th February - don't miss out!
