Perth, WA -- (SBWIRE) -- 10/22/2014 -- As expected, the RBA has kept the official cash rate at 2.5%, marking 14 months since the rate was last changed. This is good news for both first home buyers new to the market and property owners.
"Monetary policy remains accommodative. Interest rates are very low and have continued to edge lower over recent months as competition to lend has increased. Investors continue to look for higher returns in response to low rates on safe instruments," notes RBA Governor Glenn Stevens.
The news is consistent with earlier reports that predicted rates were unlikely to change despite concerns regarding rising housing prices. Driving this growth is a combination of strong investor activity and low rates. In its Financial Stability Review, the RBA has issued a stern warning that steps would need to be taken to curb this growth otherwise housing values could see a sudden decrease and affect the whole economy.
Economists predict an increase in interest rates in the new year as one of these measures.
Examples of substantial growth are particularly evident in Sydney and Melbourne that both saw huge increases compared to other capital cities. RP Data Research Director Tim Lawless expects the RBA to intervene via stricter lending practices such as prudential regulation of the banking sector to slow down investment activity. These measures have yet to be implemented.
Implementation of such measures are likely to drive more competition amongst lenders as they seek to attract consumers with low fixed rate products and even cash incentives. Those new to the market can use these offers to their advantage to save a significant amount on their property purchase and even walk away with some extra cash after the deal is closed.
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