Recent out-of-cycle rate rises and increased regulation are allowing the RBA to sidestep the problem of house price growth
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Recent out-of-cycle rate rises and increased regulation are allowing the RBA to sidestep the problem of house price growth
For the 8th consecutive month, the RBA have left interest rates on hold at 1.5%, with RBA governor Philip Lowe looking to banks and regulators to cool housing prices. “Lenders need to ensure that the serviceability metrics that they use are appropriate for current conditions” argued Lowe “A reduced reliance on interest-only housing loans in the Australian market would also be a positive development.”
The RBA’s decision not to use rates to control the housing market has been applauded by the Housing Industry Association. According to HIA chief economist Harley Dale: “the RBA itself recognises in today’s statement that conditions in the housing market vary considerably around the country.”
70% of Finder’s 34-strong panel of economists don’t see the RBA changing rates in 2017 at all. When rates do change they are likely to go up, according to 86% of the panel.
Targeting interest-only borrowing was, therefore, acceptable, Dale added: “The application of stricter lending standards to geographical areas, types of buyers or housing product that do not represent any risk to financial stability would exacerbate the prospect of an impending downturn in new home construction being larger than would otherwise be the case.”
Other commentators have pointed to the impending Federal Budget as a reason for the RBA not to raise rates. Finsure boss John Kolenda said interest rate rises by major banks independent of RBA decisions had kept the RBA on the sidelines and official rates at a record low 1.5 per cent: “All of the recent out of cycle rate raises have had almost the same effect as the RBA increasing rates,” he said.
Graham Cooke, insights manager at finder.com.au suggested out-of-cycle rate rises had given the RBA ‘breathing space’ to put off raising the cash rate. RBA governor Lowe did acknowledge lenders’ rate hikes for investors in his monetary policy decision.
70% of Finder’s 34-strong panel of economists don’t see the RBA changing rates in 2017 at all. When rates do change they are likely to go up, according to 86% of the panel.
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For the 8th consecutive month, the RBA have left interest rates on hold at 1.5%, with RBA governor Philip Lowe looking to banks and regulators to cool housing prices. “Lenders need to ensure that the serviceability metrics that they use are appropriate for current conditions” argued Lowe “A reduced reliance on interest-only housing loans in the Australian market would also be a positive development.”
The RBA’s decision not to use rates to control the housing market has been applauded by the Housing Industry Association. According to HIA chief economist Harley Dale: “the RBA itself recognises in today’s statement that conditions in the housing market vary considerably around the country.”
70% of Finder’s 34-strong panel of economists don’t see the RBA changing rates in 2017 at all. When rates do change they are likely to go up, according to 86% of the panel.
Targeting interest-only borrowing was, therefore, acceptable, Dale added: “The application of stricter lending standards to geographical areas, types of buyers or housing product that do not represent any risk to financial stability would exacerbate the prospect of an impending downturn in new home construction being larger than would otherwise be the case.”
Other commentators have pointed to the impending Federal Budget as a reason for the RBA not to raise rates. Finsure boss John Kolenda said interest rate rises by major banks independent of RBA decisions had kept the RBA on the sidelines and official rates at a record low 1.5 per cent: “All of the recent out of cycle rate raises have had almost the same effect as the RBA increasing rates,” he said.
Graham Cooke, insights manager at finder.com.au suggested out-of-cycle rate rises had given the RBA ‘breathing space’ to put off raising the cash rate. RBA governor Lowe did acknowledge lenders’ rate hikes for investors in his monetary policy decision.
70% of Finder’s 34-strong panel of economists don’t see the RBA changing rates in 2017 at all. When rates do change they are likely to go up, according to 86% of the panel.
Are you a Top 10 Brokerage? Prove it!
Applications for MPA Top 10 Franchise and Top 10 Independent Brokerage reports close THIS FRIDAY. Get your brokerage recognised in the magazine and online, based on a combination of factors; not just volumes. It takes 2 minutes to apply online: http://www.keymediasurvey.com/MPA/TopBrokerages2017/
