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RBA holds tight, watches market influences

By Sarah Lefebvre on Apr 05 2017

A host of market variables, including APRA’s move to cool investor demand and out-of-cycle interest rate changes, convinced the RBA Board to leave the official cash rate on hold today, according to LJ Hooker’s Head of Research Mathew Tiller.

Mr Tiller tipped the Central Bank’s Board to monitor the various forces in the marketplace over the remainder of 2017, further lessening the chance of any adjustments.

APRA’s decision to de-risk the mortgage market by capping the amount of investor loans on the balance sheets of lenders, independent interest rate changes by major lenders, a rise in new listings in many metropolitan markets, and softening employment figures were creating a complexed market environment, said Mr Tiller.

“On the face of it, the measures and new influences in the market should produce a moderation of price growth, especially in the markets of Sydney and Melbourne which have been running hot for some time,” said Mr Tiller.

“But the RBA is holding tight in the immediate term and continuing to keep a watchful eye on the key indicators over coming months, especially with several influences at play, currently.

“The RBA will likely hold the line for the remainder of 2017 but, as we’ve seen this year, that doesn’t guarantee the status quo for mortgagees, with many banks citing the cost of funding to raise their own house interest rates.”

New listings have picked up across most capital cities, with an average 4.9% increase in new stock compared to the same time last year.

“We’ve seen an increase in sellers recognising the opportunities of current demand, motivating them to test the market. We’re likely to see more sellers go to market, wanting to capture the most of slowing growth,” said Mr Tiller.

Canberra recorded the largest rise in new listings (22.1%) compared to the same time last year. Sydney recorded a 14.3% increase while Melbourne recorded 4.2%.

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