RBA announces cash rate decision for May 2014
The Reserve Bank of Australia has today announced the outcome of its fourth board meeting of the year.
As widely predicted, the RBA announced at 2.30pm today it will be keeping the cash rate on hold at 2.5 per cent.
A weaker than expected rise in consumer prices combined with strong unemployment data has encouraged the RBA's decision, according to Mortgage Choice's spokesperson Jessica Darnbrough.
"With inflation now sitting comfortably within the RBA’s target range, the Board would have thought it prudent to leave the official cash rate on hold for yet another month," she said.
RP Data’s national research director Tim Lawless said the ongoing low interest rate environment is likely to encourage higher levels of housing market activity "which provides a fantastic multiplier for the Australian economy."
“However we anticipate that natural affordability barriers and low rental yields will continue to dampen the exuberance that has been very much evident in Sydney and Melbourne.”
Despite a steady outlook for most of 2014, loan comparison website finder.com.au has warned home loan interest rates may still increase.
“Our monthly survey of leading experts suggests that it will be at least four months before we will see any movement to the cash rate by the Reserve Bank. However, that doesn’t mean your variable home loan rate won’t change,” said finder.com.au’s Michelle Hutchinson.
“We found that five lenders increased their rates on seven home loans by up to 0.10 percentage points this year, including Citibank, Homeloans, HSBC, Loans.com.au and Westpac," she said.
“We’ve also seen seven lenders drop 20 home loans this year by as much as 0.17 percentage points.”