Interest rates are holding steady at 1%. What does this mean for the housing market?
After record back-to-back cuts to the cash rate earlier this year, bringing it to a historic low of 1%, the RBA has chosen not to make any more cuts in the imminent future.
Economic growth over the first half of this year has been lower than expected, but the forecast isn’t all doom and gloom. Australia’s vital signs are showing improvement, with employment on a strong growth streak, labour force participation at an all-time high and wages at a steady level.
Another cut could be on the way in October or November, to help stimulate the slowing economy over the next couple of years. Wondering why there’s such a big break after the RBA slashed rates two months in a row? It’s to let the current cash rate have time to take effect, since it’s almost guaranteed the cash rate will be cut to 0.75% before New Year.
What does this all mean for the housing market?
At the time of writing, many lenders have their variable rates sitting around the 3–5% mark, meaning mortgage rates are currently at record lows.
Auction clearance rates are rising and there is currently more demand than supply. The national property market has just recorded its largest monthly increase in two years as Australians capitalise on these low rates, with more relaxed lending standards and the stability of the Federal Government. The market is rebounding, and faster than originally predicted.
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