Reserve Bank leaves official cash rate on hold at Melbourne Cup Day meeting
In spite of the hold, home owners are still feeling the pinch of out-of-cycle rate moves by lenders.
While the Reserve Bank chose to leave the official cash rate on hold at 1.50% for a record 27th month, rising home loan rates mean the hold will give little relief to most mortgage holders.
"It's important to note that mortgage rates to investors are up as much as 50 basis points over the same time frame," CoreLogic research head Tim Lawless said.
"That's the equivalent of two rate hikes, and variable rates for owner-occupiers have increased by 15 basis points over the past two months alone. The rise in mortgage rates, particularly for investors who are now paying a 55 basis point premium over owner-occupiers, together with tighter lending conditions more broadly, has been a key factor in taking the heat out of the housing market," Lawless said.
The hold came as no surprise to most economists, with 100% of the experts polled in the Finder Monthly RBA Survey correctly predicting inaction by the RBA. Lawless indicated cooling house prices and stagnant wage growth would have made the decision an easy one for the Reserve Bank.
While lenders have set a pattern of moving out-of-cycle with the RBA in recent months, Lawless predicted this trend was unlikely to continue.
"With the cash rate remaining on hold for the foreseeable future and funding cost pressures easing, we are likely to see mortgage rates remain close to their current levels, which should help keep a floor under housing demand, especially with housing affordability now improving and labour markets strengthening," he said.