Over the past 10 Melbourne Cup days, six have seen a change in cash rates declared by the RBA, just half an hour prior to the start of the race.
But the probabilities were very high on this one.
Today, at the RBA’s monthly board meeting, it announced that the official cash rate will remain at 2.50% p.a. for November 2014.
Survey Forecasts Rates on Hold
According to a survey of leading financial experts in Australia by financial website Finder.com.au, all 33 respondents correctly forecasts that rates would kept as is once again.
Despite the Reserve Bank frequently changing the interest rate on Melbourne Cup Day, putting it on hold was positive news before Christmas, one of the biggest spending seasons of the year, according to Michelle Hutchinson, a spokesperson for Finder.com.au and a realestate.com.au blog author.
She further explains that “Borrowers with a variable rate home loan are celebrating, as today’s cash rate pause means they won’t be paying higher mortgage repayments for Christmas.”
The Impact on the Property Market
The news is good for those selling their property, says LJ Hooker CEO Grant Harrod.
According to Harrod, “Record low interest rates and demand continuing to exceed supply in many markets, has helped house price growth across the country which pushed the property market strongly in favour of sellers.”
Harrod also says “This strength and price growth has been the main focus of commentary and concern from the RBA over recent months. However, while buyer demand still remains strongly in place, the current spring selling season has seen listings begin to rise to accommodate this demand. This has in turn seen price growth begin to moderate and with it any likelihood of a change of interest rates in the near term.”
Rates may increase in 2015, concurs Raine and Horne estate agents CEO Angus Raine.
Raines says “The RBA’s jawboning of rapid real estate price growth seems to be kicking in, except in Sydney, while the latest drop in inflation will help keep rates on hold for some time yet. That said, longer-term inflation expectations, reported late last week, will also give the central bank some food for thought.”
The last RBA Board meeting in 2014 will be on December 2.