After three consecutive rate rises, the reserve bank of Australia (RBA) left the official cash rate on hold in June.
The RBA has raised the official interest rate six times since last October, pushing it from the historic low of 3 per cent last year to a more neutral setting of 4.5 per cent.
Renewed signs of global economic weakness have brought the RBA’s spate of rate hikes to a grinding halt however.
Escalating debt problems in Europe have had a significant flow on effect on global markets and the RBA is still trying to establish the potential impact on domestic inflation pressures.
While the European Union has worked hard to contain the Greek Sovereign debt crisis, the RBA said in its June board meeting it would take a ‘wait and see’ approach to the actions of European nations to bring budget deficits under control.
As such, economists Shane Oliver says the problems in Europe, as well as softening housing demand, will push the RBA to keep the official cash rate at 4.5 per cent until at least August.
The latest statistics from Residex show that while demand for housing has weakened compared to earlier this decade, the house market still grew in value by 1.9 per cent in the last few months while the unit market increased by 3.4 per cent.
In the two dearest markets, Melbourne’s house median value grew by 7.7 per cent. Overall, all capital city house markets except Perth increased in value in the last 12 months.
Although rates have remained stable, borrowers should consider reviewing their home loan to ensure its still the most appropriate for their needs. If your situation has recently changed – for example you have a new job or a child on the way – your current mortgage may not be the best for you.
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