Official cash rate decision good for further market stimulation
The latest official cash rate decision by the Reserve Bank of Australia (RBA) was announced yesterday (February 4), with the board deciding to retain the historically low level of 2.5 per cent for another month.
This could be great news for those interested in entering the real estate market - whether they're selling a property or buying their own home. The official cash rate helps to dictate the overall economic health of the country, which in turn affects the real estate market.
When the cash rate is low, this often translates into reducedinterest rates being offer to consumers by lending institutions like banks and mortgage brokers. This, in turn, allows borrowers to secure a smaller interest rate on their home loans - helping to reduce the overall amount expected for repayments in the long term.
Many industry bodies expected the cash rate to remain the same, especially following the recovery being seen across the board following the initial drop down to 2.5 per cent.
Shane Garrett, a senior economist for the Housing Industry Association, said the RBA's decision to retain the current cash rate represented a "sound policy prescription" for the nation, which could help to spur on further market recovery.
"Low interest rates can help to bolster domestic demand in particular," said Mr Garrett in a February 4 statement.
"The recovery in new dwelling investment over the past year is evidence of this. However, the weak state of the home renovations market underlines the need for interest rates to remain low in order to revive activity across all sectors of the economy."
This could be great news for those interested in purchasing property. Regardless of whether you're looking as a first home buyer, hoping to upgrade to a new residential property or expanding your investment property portfolio - now could be a great time to take advantage of the market.
Real Estate Institute of Victoria Chief Executive Officer Enzo Raimondo said that today's announcement will help to support greater confidence in the nation's real estate market.
"We finally saw the effects of last year’s low interest rates in the final few months of 2013 - with an increase in Melbourne’s median house price in the December quarter just gone," said Mr Raimondo in a February 4 statement.
"While it is yet to be seen whether the Reserve Bank will move on interest rates later this year, the decision enables home buyers and investors to act with greater certainty as 2014 gets underway."